Abstract
Aiming at the social phenomenon of the coexistence of high housing prices and capital deepening, this paper explores the mechanism of transmission of capital deepening to urban housing prices. The relationship between urban housing prices and capital deepening based on the empirical evidence of 285 prefecture-level or above cities during 2005–2013 is studied to provide a new perspective explaining the rise of housing prices and direction for regulating urban housing prices. The main conclusions drawn are as follows: capital deepening has enhanced urban housing prices significantly. For every 1% increase in capital deepening, the urban housing prices increase by 0.3286%. In addition, the driving effect is characterized by some regional differentiations. The Chinese government's “four trillion yuan” economic stimulus plan has increased urban housing prices significantly. Under the two-wheel driving mechanism of “market-government”, capital deepening promotes urban housing prices through the extrusion effect of investment and the structure effect of housing demand. Hence, allocating capital elements rationally and realizing the integration innovation of institutions are important directions for guiding a rational return of urban housing prices.
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