Due to the fact that real estate prices is not only concerned with common people live and work in peace and contentment, but closely associated with the trend of national macroeconomic situation, the excessive rise in real estate prices has drew extensive attention in all layers of society. Many experts and scholars pointed out that high real estate prices in some cities and regions have already became the latent danger to the healthy and sustainable operation of macro-economy. Our country has begun to initiate control measures over the real estate industry forbidding the developers’ land reserves, accelerating the construction of policy-based house, and a series of measures to curb the excessive rise in price; however the effect of policy implementing is far from satisfaction. Under the background that the whole society all focus on the higher and higher prices, talking about the reasons driving the real estate prices to rise were particularly necessary. Land finance is not the authentic reason promoting prices and its effect maintains uncertain. The predecessor’s work still lacks of empirical research; what’s more, the effect of land finance on the real estate prices should be considerate from the point of its expenditure channel: the degree of its promoting real estate prices is to a great extent associated with expenditure channel in our country. Even if the benefit of land transfer is high, due to the balance of payment deficit is small or more expenditure on policy-based housing and the old city renovation. Land finance will finally weaken its promoting effect.