Has the Newly Imposed Property Tax Controlled Housing Prices? An Analysis of China’s 2009–2020 Interprovincial Panel Data

Abstract

The stability of the real-estate market is crucial to China’s economic development and, in times of crisis, the economy will experience systemic adverse reactions that require appropriate regulation by the state using tax policy tools. Therefore, we analyzed the impact of real-property tax on house prices using panel data for 31 provinces in China from 2009 to 2020 using an empirical method, i.e., the instrumental variables approach. The empirical results show that each of the previous property-related taxes actually contributed to the increase in house prices and did not have a dampening effect. The newly introduced property tax will lead to a decline in house prices, which will help to alleviate the overheating of real-estate investment and mitigate the real-estate bubble crisis. A rational view of the impact of a property tax on housing prices needs to be taken in the context of factors such as income levels, consumer price levels, loan rates, and Chinese consumer culture. In order to achieve the goal of “no speculation in housing”, we also need to pay attention to the regulating effect of a property tax in combination with many other factors. This study is important for promoting property tax reform, curbing overheated real-estate investment, and promoting healthy economic development.

Housing prices and green innovation: evidence from Chinese enterprises

“…According to the research methods used in the studies by Hou et al . (2022) and Song and Hao (2022), the average selling price of urban commercial housing is considered a reliable measure of the housing price level in cities.…”

“…Dependent variable: Urban housing price ( Lnprice ). Referring to the practice of Hou et al . (2022) and Song and Hao (2022), this paper measures the city's housing price level with the average selling price of urban commercial housing and processes the housing price data logarithmically.…”

“…According to the research methods used in the studies by Hou et al (2022) and Song and Hao (2022), the average selling price of urban commercial housing is considered a reliable measure of the housing price level in cities. As a result, the housing price level is utilized as the explanatory variable in this current paper to study its impact on green innovation.…”