Financial Stress,Land Finance And House Prices

Since the real estate marketization,China's housing prices have been in a rising stage as a whole.By the end of 2017,China's average house prices have increased by 2.83 times.Regarding the rise in housing prices,the state has issued a series of macro-control policies at the same time,but it still cannot effectively control the rise in housing prices,and even came out the phenomenon of “more and more upswing.” The rise in housing prices has also attracted the attention of scholars.Scholars mainly explain the rise in housing prices in terms of housing supply and demand,urbanization rate,population structure,fiscal system,and official promotion mechanism.Among them,the promotion of housing prices by land finance is part of the scholars.definitely.There are many motives for local government to pursue land finance.The fiscal power and the power of the fiscal power decentralization reform do not match,and the local government's financial pressure is gradually increasing,which leads to financial pressure becoming one of the important motives for local government to pursue land finance.Therefore,this paper explores the impact of local finance on housing prices in the context of fiscal pressure,and sets three hypotheses.The increase in fiscal pressure will promote local governments' dependence on land finance.Land finance has a positive impact on the rise of local housing prices.Financial pressure promotes land finance and promotes housing prices.In order to verify whether the three hypotheses are true,this paper based on the panel data of 230 cities,using the fixed effect and the system GMM panel model to empirically analyze the hypothesis.The empirical results show that under the circumstance of the increasing financial pressure of local governments,the easing of fiscal pressure by relying on land finance will lead to the rise of housing prices.In order to verify the reliability of the empirical results,this paper conducts a robustness test using alternative variables.To further demonstrate whether the relationship between fiscal pressure,land finance and housing prices is affected by regional differences and the size of the city.In this paper,230 cities are divided into three regions: eastern,central and western.The sample is further analyzed by regression analysis.The results show that the financial pressure in the western region is greater than that in the eastern and central regions,and the positive impact of land finance on house prices is higher than that in eastern and central regions.When the full sample data excludes 57 large and medium-sized cities,the impact of land finance on housing prices in the context of increased fiscal pressure has increased significantly.It explains that the financial pressure of large and medium-sized cities has less impact on house prices through land finance than other small cities.Based on the empirical results,combined with the compilation of the previous literature,the paper proposes the following suggestions for stabilizing housing prices: First,broaden the financing channels of local governments,effectively alleviate the pressure and reduce their dependence on land finance;Second,improve the supervision of the land market,increase the supervision of land transfer fees,and strengthen the supervision of the budget for the sale of land market transactions;Third,promote the reform of fiscal and tax incentives,adjust the proportion of central and local fiscal revenue,so that local governments have sufficient sources of fiscal revenue;Fourth,improve the central-to-local transfer payment system and narrow the gap between regional fiscal revenues.