The objective of this paper is to investigate the dynamic effects of fundamental factors on housing prices in China. We examine how quickly and strongly housing prices react to changes in these factors. We especially want to test whether these reactions change after China adopted a new system for granting land use rights in 2002. We find that the main fundamental explanatory factors explaining Chinese housing price variations are household disposable income, new-build supply, housing units sold, unemployment, and land prices. Among these factors, the most important one is land price. The effect of land prices on housing prices is especially enhanced after adoption of the new system for granting land use rights in 2002.