It is important for macro policy makers to make clear what monetary policy instruments are significant to control housing prices. According to China's 35 big-to-medium sized cities' average house price index spans from 2000Q1 to 2012Q3, this paper applies log-linear regression and dummy variable analysis to study the impact of money supply, mortgage interest rate, credit and GDP on housing prices. Empirical analysis shows that credit is the most important factor to affect housing prices, GDP has a positive effect, while mortgage interest rate do not have significant effect on house prices. Though money supply does not have long run positive effect, it can affect house price positively in the short run. Hence the best way to control China's house price is to control the scale of credit.
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