Although Past studies showed that housing prices in Taiwan had experienced several structural changes, there was no detailed analysis of why these changes occurred. In this paper, we use the Error Correction Model (ECM) to construct a housing price model. We also employ impulse response analysis postulated by Wang (2000) to explain structural changes of housing prices in both Taipei City and Taipei County. Empirical results revealed that housing prices in both cities correlate with money supply, stock market index and the allowed floor areas specified by the building permit. In both cases, the housing price model that incorporates the three variables can better explain structure changes than do models that ignore these factors. Besides, while the performance of stock market has direct impacts on the structural changes of housing prices, money supply affects prices indirectly. The influence of the building permit is not significant.