A latest survey done in Shanghai indicated that home buyers are anticipating the reintroduction of a tax rebate to encourage home purchases which industry experts said may come quickly and will be a positive move to boost the market.
"The experience gained in Shanghai 10 years ago has proved very useful to spur housing demand, and internal discussions among some industry people have been taking place," said Yin Kunhua, a real estate expert and professor at Shanghai University of Finance and Economics. "However, we shall wait for top policy makers to set the tone in the country's economic plan for next year before deciding what to do in the next step."
China's top decision makers gathered in Beijing on Monday for the three-day Central Economic Work Conference to set the nation's economic work plan for next year amid the global financial crisis and slowing domestic growth. Cai Weimin, an expert, told Shanghai Daily yesterday that he expected the local government to bring out "heavy-handed" policies to boost the market as early as the end of the first quarter of next year.
"Weighty stimulus policies such as the rebate in individual income tax for home buyers or a loosening of the second mortgage may all likely come out as soon as the first quarter, when in my personal opinion, the local real estate market might hit the bottom," Cai said. He predicted the market "won't likely see a pick-up until the third quarter of next year."
Shanghai introduced the tax rebate policy for home buyers in 1998 to encourage people to purchase housing after abolishing the welfare housing system. People who bought their homes between June 1998 and May 2003 were able to get back part of, or fully, the taxes on their individual income from the purchases.
In 1999, one year after the policy was implemented, transactions of new houses, excluding those designated for relocated residents, rose to more than 12 million square meters in Shanghai, from less than 8 million square meters in 1998.
But a requirement in September last year by the People's Bank of China and the China Banking Regulatory Commission for second-mortgage holders to make a down payment of at least 40 percent and pay a 10-percent premium on interest rates dealt a major blow to the country's housing market.
(Shanghai Daily December 11, 2008)