Abstract: Using panel data of 281 cities from 2001 to 2013 and employing spatial econometric models, this paper studies the reasons of the rise in house prices and spatial effects of land supply on house prices. Our empirical analysis comes to the following conclusions:the total effect of land supply for national house prices is -0.0532, which shows that land supply plays an important role in house prices; land supply has a significant negative spatial spillover effect on house prices, its role in regional house prices will be overestimated if spatial spillover effect was neglected. Besides, spatial effect is different in time and space. The influence of spatial effect of land supply on house prices is greater in the east than that in the Midwest China since 2003, which shows that the biased policy of land supply has led to a further rise of house prices in the east. In addition, we found that the ratio of industrial land has important influence on house prices. Therefore, in order to rein in house prices from rising too fast, it is necessary to deepen the reform of land supply, increase amount of land supply and adjust land structure to prevent the excessive expansion of industrial land.

Key words: house prices, spatial econometrics, land supply, spatial spillover effect