Abstract: During the past fifteen years, many countries have experienced dramatic fluctuation cycles in real estate prices, accompanied by drastic fluctuations in international capital flows. Based on the regression analysis with the date from the first quarter of 1999 to the third quarter of 2013, this study obtains such results that the growth rate of the actual credit has an important impact on the growth rate of the actual housing prices, which gives an explanation to the 34% housing price increase, while the adding of the explanatory variable of the international capital flow index can only raise the adjustment R2 coefficient of the regression equation by 4 percent. In the sub-samples from the first quarter of 2003 to the third quarter of 2013, the growth rate of credit can only explain the 27% housing price increase; while the adding of the explanatory variable of the international capital flow index can raise the adjustment R2 coefficient of the regression equation by 10 percent. Therefore, it can be seen that the argument of the US National Bureau of Economic Research is one-sided, which believes that the rationality of taking the capital regulation policy as the counter cycle macro-prudential policy instrument can be questioned, at least it does not suitable for China. During the course of releasing the regulation on the capital accounts in China, the government should take the possibility into account that capital flow may lead to bursting of housing price bubbles and then triggering of financial crisis, especially it should treat the openness of other investment capital accounts cautiously. It is beyond doubt that the capital regulation policy has its rationality to be used as the macro-prudential policy instrument for China, such a great country with an emerging market economy.

Key words: international capital flows; real estate prices; controls on capital accounts