This paper introduces "collateral effects" and "crowding-out effects" into the same framework to explain the mechanism of rising house prices’ impacts on industrial firms’ markups. On that basis, it does an empirical study on the theoretical propositions according to the Annual Survey Data of Chinese Industrial Firms (ASIF). The results show that: (1) In general, the increase of house prices significantly reduces Chinese industrial firms’ markups; (2) Subsample regression shows that private, Tier 1 and hot Tier 2 cities, eastern region and capital-intensive firms facing larger negative markup effects. (3) The check of the potential channels shows that Chinese industrial firms have insignificant "collateral effects" and "crowding-out effects". The decrease of markup can be explained by the fall of export product quality and total factor productivity from the channel of price and cost. (4) The correlation with the real estate industry and the regional marketization index significantly affect the negative markup effects. This paper has the reference significance to the policy coordination of "Destocking" and the promotion of industrial firms’ competitiveness.