After a series of measures designed to slow down China's booming property market, seven government departments took further action on Wednesday by issuing proposals for stabilizing soaring residential property prices.

The proposals were jointly issued by the Ministry of Construction, the State Development and Reform Commission, the Ministry of Finance, the Ministry of Land and Resources, People's Bank of China, the State Administration of Taxation, and the China Banking Regulatory Commission.

China's average housing prices rose by 14.4 percent in 2004. In the first quarter of 2005, housing prices rose by 12.5 percent year-on-year.

In east China's Shanghai Municipality, which has one of the highest housing prices in China, average prices in urban and suburban regions have exceeded 10,000 yuan (US$1207.7) per square meter.

Experts say improper supply structures of commercial housing and disordered markets contribute to the rising prices.

Zheng Jingping, spokesman of the National Bureau of Statistics, said recently that the proportion of affordable housing had reduced from 6.1 percent in 2003 to 4.6 percent in 2004.

To ensure an adequate supply of small to medium-sized properties at low to mid-priced levels, the proposals demand that local real estate administrative departments obtain the necessary information from developers before they are permitted to begin development.
 
The proposals recommend reducing construction costs, and restricting developers' profits to three percent.

The proposals also recommend curbing land speculation. Owners of land undeveloped one year after the date of purchase will be charged a "land idling" fee. Developers who fail to develop their land for two years or more after purchase will have their development rights revoked.

Experts say that this policy will be helpful in cracking down on land "hoarding", a practice that has become increasingly popular of late. Land owners, whether private companies or individuals, leave their land undeveloped, waiting for further prices increases in property prices so as to sell at a profit.

As of June 1, 2005, owners of residential property who opt to sell after having lived in the property for less than two years - compared with one year under current taxation policies - will be subject to a business tax, which is the difference between the sale and purchase price.

Experts say this measure should prove useful in curbing speculation in the residential property market by increasing the trading costs to speculators.

Other measures proposed include a requirement that purchases be made under the buyer's real name, and prohibiting advanced sales in uncompleted projects.

(Xinhua News Agency May 12, 2005)