Chinese govt tightens property rules (2)

08:26, January 11, 2010      

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On December 9, a policy that eliminated the turnover tax for those who sold homes they had owned for more than two years was halted. The tax will be waived only for those selling homes they have owned for at least five years.

During an executive meeting chaired by Premier Wen Jiabao on December 14, the government vowed to increase the supply of smaller homes at medium- and low-price levels, and continue to support residential consumption for improved housing while curbing speculation.

On December 17, five ministries, led by the Ministry of Finance, moved to crack down on the hoarding of undeveloped land. They announced that developers must pay land- transfer fees within one year of the sale, starting with a 50 percent down payment at the time of the transaction.

Housing prices soared last year, especially in big cities such as Beijing and Shanghai, where downtown housing prices reached 30,000 yuan per square meter.

Shenzhen, a southern city neighboring Hong Kong, saw its average house price more than double in one year, to 22,300 yuan per square meter in December.

"These measures reflect the government's determination to cool down the housing market," said Chen Guoqiang, director of the real estate research center at Peking University.

"One of the highlights is that the required down-payment amount is based on families instead of individuals, and I expect to see its impact in the future," he said.

Qi Guoqing, a sales agent at 5i5j, one of the most popular real estate brokers in China, told the Global Times that the latest government measures will surely exert some influence on the real estate market.

"The number of potential home buyers who come to us has dropped by 50 percent recently. Most buyers still want to wait, expecting a drop in real estate prices soon," he said.

Yi Xianrong, Finance Institute director at the Chinese Academy of Social Sciences, questioned the newly unveiled policy.

He said that soaring real estate prices is the cause of all problems in the Chinese housing market, and he personally has little confidence in the influence of the newly unveiled policies to fundamentally cool down prices.

Zhang Lixin, a real estate analyst in Beijing, said that the speculative investment in property, which accounts for almost half of property purchases, as well as illegal practices by developers such as keeping land reserves and withholding property sales until prices increase, has caused panic among potential home buyers.

"It's high time that the government regulate the real estate market. High property prices have become a sore point for homebuyers and a potential hazard to the healthy operation of the macro economy," he said.

He warned that if there is a further spike in property prices, banks are likely to tighten loan extensions and the entire economy will be hampered.

Source: Global Times
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