This paper uses a VAR model to study the relationship between income inequality and housing bubbles in Macau, with the sample spanning a period from 2005 to 2013. The paper also discusses the effects of taxation on Macau’s housing bubbles. The empirical evidence found from Macau shows that there exists a significant positive correlation between income inequality and housing bubbles. The policy implication of this study is that housing bubbles can be mitigated in Macau through tax adjustment.