Under the general equilibrium perspective of house price decision model: An empirical research of the effect of the property tax of China

China has been facing an intractable problem which is the extremely high house price especially in the recent 10 years. The average house price of China has increased about 3 times in ten years. The situation in the major cities of China such as Shanghai is more serious. Such high house prices has severely harmed the society welfare in China, and the inequality is worse and worse at the same time. China has been considering to introduce the property tax which never exists in China before as a way to reduce the house price and increase the government revenue. The house price is always a popular topic in economics. In this paper, I try to analyze the possible influencing factors of house price from the micro sight. From the maximization of utility of households and maximization of profit of real-estate developers, the total demand curve and supply curve can be estimated, and then, a theoretical house price model is established under the general equilibrium perspective. With the theory support, the empirical research can be reasonably performed. Beijing and Shanghai, as two major cities in China, together with China as a whole, are modeled in the empirical study for the investigation of the house price of China. After estimating these three house price model, the property tax simulation are performed for each house price model. Each equation of the empirical house price decision model is estimated with the time series data from 2005 to 2016 of Beijing, Shanghai and the whole China. The result of the simulation of the 5% property tax rate in each model shows that the property tax is indeed enable to decrease the high house price.