Abstract: This paper investigates the relationship between housing prices and land revenues by comparing empirical facts from dozens of industrialized countries during 1880−2010 and Chinese housing markets across different tiers of cities since the housing system reform in 1998, and analyzes the inherent mechanism of real estate price appreciation. Moreover, we discuss the implications of housing and land price boom on economic growth, structure change and income inequality, with extensive focuses on crowding out real sectors and accumulating aggregate risks. Finally, we study the policy implications of developing a rational housing market, meeting targets in the short term as well as in the long term.