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Record surge in house prices
By Cao Qian |
April 15, 2010, Thursday
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Print Edition
Print Edition
CHINA'S urban property prices rose at a record pace in March, the National Bureau of Statistics said yesterday.
Real estate prices in 70 major cities on the Chinese mainland jumped 11.7 percent, the biggest year-on-year gain since July 2005, when the bureau doubled the number of cities it was tracking to 70.
The March lift, accelerating from a 10.7 percent increase in February and a 9.5 percent gain in January, was the 10th in a row since last June, when property prices in the 70 cities monitored by the government started to register growth following minor declines for six months.
"The March figure just indicated that earlier measures introduced by the government to cool down the country's overheated housing market are not working and drastic policies are needed to rein in ever-growing speculation," said Gong Min, a research manager with Shanghai Centaline Property Consultants Ltd.
"Taxes levied on home owners during the period they hold their homes, as well as changes in mortgage policies on second or third homes, are very likely to be introduced within the year, initially in gateway cities such as Shanghai and Beijing."
The introduction of such a tax, most recently mentioned in a report by Shanghai Securities News last Thursday saying that a draft scheme has already been worked out, has been regarded by many industry analysts as an effective way to rein in speculation because it will help raise the cost of holding a home. Home owners in China now only pay tax when they buy or sell properties while no charge is levied during the period they hold them.
The likelihood of such a tax was further strengthened when the Shanghai Housing Guarantee and Administration Bureau, the local industry watchdog, responded on its Website the same day that such a study at state level on property tax was normal and the city would implement the central government policy once it was released.
And in a speech at the Boao Forum for Asia over the weekend, Liu Mingkang, chairman of the China Banking Regulatory Commission, urged all banks to increase awareness of financial risks and to use a credibility ranking system to identify possible risks of borrowers before granting loans.
Liu reiterated that lenders had the right to reject loan requests from property speculators and some commercial banks in Beijing have already raised the down payment for second or multiple-home mortgages to as much as 60 percent from the current 40 percent requirement.
"These two measures can be effective and seem rather imminent as house prices are almost running out of control despite all earlier efforts to cool down the market," Gong said.
In a series of government commitments to cracking down on speculation, China re-adopted a sales tax on homes sold within five years of purchase this year and raised mortgage rates.
The government also announced last month that developers will have to pay higher deposits for land purchases and banned banks from lending to builders found hoarding land or holding back home sales in anticipation of higher prices.
Real estate prices in 70 major cities on the Chinese mainland jumped 11.7 percent, the biggest year-on-year gain since July 2005, when the bureau doubled the number of cities it was tracking to 70.
The March lift, accelerating from a 10.7 percent increase in February and a 9.5 percent gain in January, was the 10th in a row since last June, when property prices in the 70 cities monitored by the government started to register growth following minor declines for six months.
"The March figure just indicated that earlier measures introduced by the government to cool down the country's overheated housing market are not working and drastic policies are needed to rein in ever-growing speculation," said Gong Min, a research manager with Shanghai Centaline Property Consultants Ltd.
"Taxes levied on home owners during the period they hold their homes, as well as changes in mortgage policies on second or third homes, are very likely to be introduced within the year, initially in gateway cities such as Shanghai and Beijing."
The introduction of such a tax, most recently mentioned in a report by Shanghai Securities News last Thursday saying that a draft scheme has already been worked out, has been regarded by many industry analysts as an effective way to rein in speculation because it will help raise the cost of holding a home. Home owners in China now only pay tax when they buy or sell properties while no charge is levied during the period they hold them.
The likelihood of such a tax was further strengthened when the Shanghai Housing Guarantee and Administration Bureau, the local industry watchdog, responded on its Website the same day that such a study at state level on property tax was normal and the city would implement the central government policy once it was released.
And in a speech at the Boao Forum for Asia over the weekend, Liu Mingkang, chairman of the China Banking Regulatory Commission, urged all banks to increase awareness of financial risks and to use a credibility ranking system to identify possible risks of borrowers before granting loans.
Liu reiterated that lenders had the right to reject loan requests from property speculators and some commercial banks in Beijing have already raised the down payment for second or multiple-home mortgages to as much as 60 percent from the current 40 percent requirement.
"These two measures can be effective and seem rather imminent as house prices are almost running out of control despite all earlier efforts to cool down the market," Gong said.
In a series of government commitments to cracking down on speculation, China re-adopted a sales tax on homes sold within five years of purchase this year and raised mortgage rates.
The government also announced last month that developers will have to pay higher deposits for land purchases and banned banks from lending to builders found hoarding land or holding back home sales in anticipation of higher prices.
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