Abstract: High housing prices can increase the disposable fiscal revenue of local governments, but it will also increase the rent-seeking temptation, making officials tend to allocate excessive financial resources to areas that are easier to seek rent. It will also distort fiscal fund allocation, thereby reducing the efficiency of fiscal expenditure. This paper measures the fiscal expenditure efficiency of 30 provinces in China and tests the impact of the high housing prices on the efficiency of fiscal expenditure. The results show that there is a U-shaped curve relationship between the housing prices and the fiscal expenditure efficiency. When housing prices are below a certain threshold value, high housing prices will surely damage the efficiency of local governments’ fiscal expenditure. Further analysis shows that increasing the degree of fiscal decentralization of local governments and strengthening the anti-corruption efforts will alleviate the adverse effects of high housing prices on fiscal expenditure efficiency. Therefore, it is necessary to control the growth rate of housing prices, gradually change the way of fiscal revenue depending on land leasing, reduce the degree of mismatch between local governments’ fiscal power and office power, and strengthen the degree of anti-corruption, so as to improve the efficiency of local governments’ fiscal expenditure and promote the transformation to service-oriented governments.

Key words: high housing prices, local government, efficiency of fiscal expenditure, fiscal decentralization