Abstract: This paper re-investigated the comovement and the granger-causality relationship between housing price and rents by using the quarterly panel date from the 30 cities of China and the new non-stationary penal econometrics methods. The paper has solved the questions of small sample and the difference of different cities. The empirical results provide clear support of a longrun co integration relationship between housing price and land price. But the relationships are different in different cities. The evidence shows that the granger-causalities run from housing prices to rents in the long-run. While in the short time the granger-causalities between housing prices and rents are not existence. This shows that house prices have gone beyond the fundamentals determined by the rents, the Chinese real estate market is irrational exuberance.

Key words: housing price, rents, the non-stationary penal econometrics methods, irrational exuberance