Mechanism of the reform of land granting ways, land price and house price in China

The relationship between land price, real-estate price and the reform of land granting ways has been a hot topic in Mainland China for several years. This paper analyzed the transmission mechanism between them. By adopting tax shifting theory, the paper hypothesized that the reform of the ways of land granting might affect land price and real-estate price, but the significance of effect relied on the demand and supply elasticity of the real-estate market. Empirical studies were done by using Granger Causality Tests and city comparison method. The results showed that the hypothesis was right.