News Analysis: New property tightening measures around the corner?
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E-mail Xinhua, August 9, 2012
BEIJING, Aug. 9 (Xinhua) -- New price-control measures may soon hit China's property market, which just began to show signs of a rebound following government stimulus measures to stimulate the slowing economy, analysts and industry insiders have said.
The government has room for further tightening measures, including expanding property tax trials and raising the transaction tax on second-hand homes, Thursday's China Securities News reported, citing sources in the sector.
It is widely expected that new cooling measures will be unveiled before September or October, the country's traditional peak season for home sales.
Details and timing of the new policies will largely depend on the report produced by a government inspection team, which just concluded a nationwide check on the implementation of local property rules, said the newspaper.
In some Chinese cities, the need for tighter controls could be pressing, as prospective home buyers that chose to wait due to a tightening market started rush-buying following two interest rate cuts in June and July, which aimed to boost economy but triggered expectations of a warming property market.
In July, the average new home prices in 100 major cities rose for the second month by 0.33 percent month on month, data from the China Index Academy showed.
"August will be a crucial period for the government control," Zhang Dawei, a chief market analyst with Zhongyuan Real Estate, a property agent, was quoted as saying, noting rising possibilities of further loosening monetary policies amid an economic slowdown.
He feared that without further tightening measures, the effects of the previous measures could fade and price growth will spiral out of control in September and October.
China has tightened its curbs on the property sector since 2010, as home prices rocketed beyond the reach of average wage earners.
The government has restricted home purchases in several cities while requiring higher down payments and introducing property taxes. The clampdown has gradually cooled the market.
Many local governments issued clear targets in home price control in 2011, but few goals were declared this year. Some of them even "fine-tuned" their property policies in the wake of weakening local economies.
Chen Guoqiang, vice chairman of the China Real Estate Society, said it is necessary for the central government to again urge local governments to be fully responsible for price control efforts and ensure the implementation of previous policies.
Without a price control target, there will be no specific criteria to measure government performance on property market curbing, he said.
Yang Hongxu, a senior analyst with the Shanghai-based E-house China Research and Development Institute, was quoted as saying that he expected the new policies to focus on implementing the previous ones while introducing a few new measures to help restrain speculative demand.
Many economists also called for further improvement in the taxation mechanism to regulate the market, which will not only cover transactions but also possession of real estate.
Chinese policy makers have already clearly stated that property tax trials will be expanded, according to Jia Kang, director of the Research Institute for Fiscal Science under the Ministry of Finance.
China introduced property tax trials in the cities of Shanghai and Chongqing at the beginning of last year as part of efforts to curb runaway home prices.
China has also vowed to build 36 million affordable housing units during the 2011-2015 period in a bid to meet the demands of low-income families and cool the property market. Enditem
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