This paper determines the consumption function form based on permanent income hypothesis and life cycle theory at first,and makes use of regions' people life data of different income households,house price and interest rate data of China from 2000 to 2006,choosing the fixed effect model of panel data to examine China's house wealth effect,and study the effect of income disparity and interest rate policy on consumption.The empirical result shows that income is still the decisive factor to consumption.For every income households,the increasing house price does not promote consumption.Furthermore,the retrenched long-term loan interest rate policy restricts the living quality of the middle income households seriously.