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Property Tax in China: Is It Effective in Curbing Housing Price?


  • Huanhuan Zheng

    () (University of York United Kingdom and The Chinese University of Hong Kong)

  • Qingyong Zhang

    () (School of Agricultural Economics and Rural Development, Renmin University of China)


This paper studies the effects of the property tax, implemented in Shanghai and Chongqing since January 28, 2011, on the housing price. Applying the synthetic control method of Abadie, Diamond, and Hainmueller (2010), we construct counterfactual housing price for Shanghai and Chongqing using monthly data from 33 cities that have no property tax. Comparing the counterfactual and actual price, we estimate that by November 2012 the average housing price in Shanghai was about 2127 RMB/m2 or 13.4% lower than it would have been in the absence of the property tax. This evidence is found to be significant using placebo test. We find no significant evidence that property tax is effective in curbing the housing price in Chongqing.

Suggested Citation

  • Huanhuan Zheng & Qingyong Zhang, 2013. "Property Tax in China: Is It Effective in Curbing Housing Price?," Economics Bulletin, AccessEcon, vol. 33(4), pages 2465-2474.
  • Handle: RePEc:ebl:ecbull:eb-13-00421

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    References listed on IDEAS

    1. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    2. Crowe, Christopher & Dell’Ariccia, Giovanni & Igan, Deniz & Rabanal, Pau, 2013. "How to deal with real estate booms: Lessons from country experiences," Journal of Financial Stability, Elsevier, vol. 9(3), pages 300-319.
    3. Jinjarak, Yothin & Noy, Ilan & Zheng, Huanhuan, 2013. "Capital controls in Brazil – Stemming a tide with a signal?," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 2938-2952.
    4. Zodrow, George R., 2001. "The Property Tax as a Capital Tax: A Room With Three Views," National Tax Journal, National Tax Association, vol. 54(1), pages 139-156, March.
    5. Zodrow, George R., 2001. "The Property Tax as a Capital Tax: A Room with Three Views," National Tax Journal, National Tax Association, vol. 54(n. 1), pages 139-56, March.
    6. Michael Keen & Alexander Klemm & Victoria Perry, 2010. "Tax and the Crisis," Fiscal Studies, Institute for Fiscal Studies, vol. 31(1), pages 43-79, March.
    7. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
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    More about this item


    property tax; housing price; synthetic control; real estate market boom;

    JEL classification:

    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook


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