Steps taken to cool down real-estate market 
Steps taken to cool down real-estate market
According to a
statement issued by the State Council yesterday, as of June 1 the
minimum down payment for a new apartment larger than 90 square metres
will be raised from 20 per cent to 30 per cent.
The ratio for an
apartment smaller than 90 square metres will remain unchanged at 20 per
cent, to cater to "the needs of middle- and low-income groups," the
statement said.
In another important move, a transaction tax
will be imposed on people attempting to resell their properties within
five years of purchase. The current period is two years. The tax rate
will stay unchanged at 5.5 per cent of the sale value.
The move,
also effective June 1, is aimed at "curbing speculative and
investment-oriented housing demand," according to the statement.
"The
transaction tax will certainly do something to combat
investment-oriented housing demand, although it will depend on how
effectively the new rules are enforced," said Wang Deyong, a
real-estate industry analyst with CITIC Securities.
"This tax on
sales of second-hand houses, together with other measures in the State
Council statement, are likely to have an impact on the market, but it
won't be dramatic," said Richard Wang, associate director of
Consultancy and Research Department with global real-estate advisor
DTZ's Beijing office.
However, for high-income earners the down payment increase may not be a major deterrent.
"It
will have little, if any, impact on my home-buying plan," said Zhao
Guocheng, 28, an Internet service company employee in Beijing.
"If
it were raised to 50 per cent, as was rumoured one week ago, then I
would have to rethink my purchase plan. Perhaps I would have to work
hard for many more years to buy a flat," said Zhao.
Earlier, in
an executive meeting chaired by Premier Wen Jiabao on May 17, the State
Council vowed to use a mix of tax, credit and land policies for this
purpose.
The State Administration of Taxation also issued a
directive on May 19 reiterating its call on local governments to impose
a 20 per cent capital-gain tax on sales of second-hand property, which
requires sellers to pay 20 per cent of the profit they make from
housing sales as tax.
Property prices in China's major cities have soared in recent years, raising concerns about an overheated market.
In
the first quarter this year housing prices jumped 15 per cent in
Beijing and 35 per cent in Shenzhen, a booming city in Guangdong
Province.
The latest moves, which also cover bank lending, are
"the most detailed policies that the government has ever taken towards
the housing market," said an executive with a Beijing-based property
developer, who refused to be named,
"It may make life harder for
the less competitive and smaller developers, but it will not have much
impact on the strong and competitive ones," he added.
The statement also called for strengthened supervision on land used for housing developments.
A
policy has been issued to require that developers of land slated for
development be charged a high "idle land fee" if it remains unused for
one year, while rights will be revoked if it remains unused for 2 years.
The
State Council paper also asked local governments to make 70 per cent of
its annual land supply available for the development of low-cost
housing.
"The land supply policy may be the most effective way to rein in surging property prices," said DTZ's Wang.
"The
land market should be better regulated. In some places, the land
auction floor price offered by local governments is too high, which
will inevitably push up prices," he said.
Source: http://www.re-estate.com/en/article/178/
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