Secondhand home sellers and buyers rushed to make a last-minute deal Tuesday, before the introduction of tough new measures that will increase transaction costs.
In a bid to curb speculation and rising housing prices, the State Council issued a new policy Friday imposing a 20 percent tax on profits from secondhand home sales. It marks the latest measure to cool the overheated real estate market.
Since the policy was announced, the number of daily secondhand home transactions in Beijing reached 759.5 units on average, up nearly 28 percent from before, the Beijing Municipal Commission of Housing and Urban-Rural Development said in a statement on its website Tuesday.
Long queues and an increase in the number of deals were also seen in housing transaction centers in Shanghai, Guangzhou and Shenzhen after the new policy was announced, according to media reports.
Qi Ji, deputy minister of Housing and Urban-Rural Development, said Monday that local governments will announce detailed measures by the end of this month corresponding to the central government's policy.
The banking regulator will also work out a new mortgage policy in alignment with the new measures, Shang Fulin, chairman of China Banking Regulatory Commission, said Tuesday when attending the parliamentary meetings, or the two sessions.
"Many of my clients want to change to a bigger house. They are eager to complete the transaction now to save on transaction costs before local detailed rules come out," Zhang Jianglong, a property broker for 5i5j Real Estate, told the Global Times Tuesday.
Currently, a buyer of a secondhand home needs to pay a 60 percent down-payment plus a mortgage that is 10 percent above the benchmark rate.
A rise in mortgage rates for secondhand homes will lead to a slide in the number of deals, Zhang said.
After the announcement of the central government's new policy, analysts and scholars said that the 20 percent tax on transaction profit instead of the original 1-2 percent of the total price will increase costs for sellers, but those costs will be passed on to buyers due to strong demand.
"The new tax policy targeting transactions will not help increase supply or reduce demand. Therefore housing prices will continue to rise over the long term due to persistent strong demand, even if transactions dip over a short period of time," Su Jing, a property analyst with Anbound Consulting, told the Global Times Tuesday.
The new tax measure will increase fiscal revenues for local governments that face declining land sales due to having less land available, just like the property tax that has been imposed in pilot cities such as Chongqing and Shanghai, she said.
However, unlike the transaction tax on home sellers, the property tax targets owners of multiple homes and is expected to prompt them to sell more houses and increase market supply.
The property tax is expected to be rolled out in more cities nationwide, but it might be postponed given the policymakers' need for time to observe the market reaction and effect of the newly announced transaction tax, Su said.
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