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Fear house curbs could raise prices


08:20, March 05, 2013

Newly issued property curbs to reduce housing speculation have stirred fierce discussion online.

As of yesterday, Sina Weibo users had posted more than 1.5 million comments about the policy that features a much higher tax on transactions.

On Friday, the central government announced an array of measures comprised of higher transaction duties, increased down payments and mortgage interest rates, and strict purchase qualifications to further tighten its grip on the real estate sector.

Of all the measures, a 20 percent capital gains tax attracted the most attention.

According to the State Council, homeowners who sell their homes may face a capital gains tax bill as high as 20 percent of the profit they make.

The move was intended to stifle speculative activities in the housing market, squeezing the unreasonable profits from the previously lucrative existing home sales and benefiting those who just bought a home in order to improve their living conditions, one microblogger commented.

However, concerns were still raised that the high duties may result in another round of price rises.

One comment was that the tax will force sellers to shift the additional costs to needy buyers, adding to their burden in obtaining a home, and push up prices again.

Xu Chuanming, a manager of a real estate agency in east China's Shandong Province, said he expects the prices of resold homes to go up in the short term and prompt buyers to turn to newly built houses.

Jia Kang, director of the Institute for Fiscal Science Research, said he believes home buyers who are discouraged by the existing home market will throng to offices selling new homes and may contribute to rising prices in some regions.

However, the policy is necessary before a comprehensive mechanism is established, Jia said.

Zhang Guowei, director of the institute of economics under the Shandong Academy of Social Sciences, said authorities should also step up the construction of commodity housing, the prices of which are determined by the market, and secure the supply of government-subsidized, low-income housing to bring down prices.

In addition, property taxes should be levied on the third homes of individual owners and the government should build online information systems on the personal home ownership of urban residents, said Pan Shiyi, board chairman of property developer SOHO China.

The central government has strengthened its efforts to control the real estate market since 2010 by implementing higher down payment ratios and restrictions on third-home purchases, which led to a brief cooling-off period.

In January, 53 of 70 major cities monitored by the National Bureau of Statistics saw prices increase of up to 2.2 percent from a month earlier.

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