This article explores the dynamics of real housing price changes in Beijing from 1998 to 2007. The study confirms the importance of economic conditions including the growth of population, change of real income, construction costs and credit on housing price appreciation. A positive relationship between regulation degree such as controlling of construction permits and availability of land supply and housing price growth is also found, especially after the government monopolized land supply in 2003. By estimating the price elasticity of new residential construction and simulating the impulse responsive model we find that the responsiveness of housing supply is weaker compared with other countries. The study also finds that the lags of change of housing price can be used to explain housing price appreciation, which confirms the inefficiency of housing market in Beijing. At last an error correction model is estimated to see the dynamic adjustment process of housing price appreciation.