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November 14, 2009

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Official wants tax on home sale profit

CHINA should prevent home prices from long-term "abnormal increases" and divert profits from home sales to the public through taxation, a senior property official said yesterday.

Dong Zuoji, director of the land planning department of the Ministry of Land and Resources, said home prices will continue to rise because land in the world's fastest-growing economy is becoming increasingly scarce.

The government, Dong said, should use taxes to give the added value of the land back to society.

Dong said the government will increase land supply for subsidized homes and adopt measures to prevent developers from hoarding land.

The government will also guarantee land use for high-tech, high value-added enterprises while limiting use for "backward" production projects, Dong said.

Due to a series of support measures adopted by the government, China's property sector rebounded strongly this year. Housing prices in 70 major cities jumped 3.8 percent last month, the biggest year-on-year increase since September 2008, the National Development and Reform Commission said early this week.

The October growth was the fifth gain in a row since June, when property prices in the 70 cities started to rebound following six straight months of decline, according to the country's top economic planner.

On a month-to-month basis, property prices in October advanced 0.7 percent nationwide, the eighth consecutive monthly gain.

In addition, the growth of property sales by value accelerated 79 percent in the first 10 months from a 73 percent gain in the first three quarters.

In addition, real estate investment in China during the period rose 18.9 percent, up from an increase of 17.7 percent in the nine months ending September.

"Demand for properties remained robust across the country as inflation expectations, coupled with a possible inflow of 'hot money' from overseas, have made real estate investment extremely active since the second quarter of this year," said Ma Ji, head of research at Shanghai Centaline Property Consultants Ltd, one of the city's leading brokerage chains.

In addition, new lending far eclipsed China's initial whole-year target set at the beginning of this year.


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