A Causality Test for Housing and Land Prices:1998-2006

An error-correction model(EMC) was formed by considering inflation and using quarterly data from China housing market through 1998-2006 and tested by Granger-causality test.The paper concludes that land price is independent of housing price and land price is Granger cause of housing price in the short run,while housing and land price interact as both cause and effect in the long run.Thus the key to curb housing price is to control land price in the near future,and to rationalize land supply and to guide housing construction planning in the long term.