This study tries to investigate the impact of fiscal decentralization on house price in China, applying spatial econometrics models to conduct the empirical analysis. This study uses official panel data for 31 provinces from 2000 to 2010 and the provincial price of commercialized buildings in China as the dependent variable, the primary finding of this study is that the relationship between fiscal decentralization and house price in China is like a U-shaped curve in which we can find an appropriate degree of fiscal decentralization minimizing the house price. In addition, the results show that the spatial dependence has a statistically significant and positive influence on house price in China. Therefore, the Chinese government could implement some fiscal policies to control the fiscal decentralization across provinces. By adjusting the degree of fiscal decentralization to an appropriate level, the houses prices between the developed provinces and developing provinces can achieve a stable equilibrium.

Keywords: China, Fiscal Decentralization, House Price, Spatial Econometrics

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