System Dynamic Model of Housing Price Fluctuations Based on the Impact of Real Estate Tax Institution and Trading Behavior

China's housing price has been witnessed remarkable increase during the last decade. It brings the great social and economic impact. Housing price drops down in a large extent under the strict policies control in 2011. The government should catch a good grasp of policy control since the problem is a paradox. In the paper, a system dynamics model is built to find the relationship among the stringent of the national regulatory policies, people's transaction behavior and housing price changes. Obvious effect has shown to control the rising price under the implementation of real estate tax institution. The equilibrium price changes with the different rate of real estate tax, and as the tax rate increases, housing price tends to drop down. Under the real estate tax rate of 0.4%, housing price fell by about 8 percent, with the rate of 0.9%, the price fell nearly 20 percent. These results can provide some references for the government to take controlling measures over housing price.