Source : Business Times – 15 Dec 2009
China will use tools including land-use policies and taxation to control property price rises, the government said yesterday, the latest indication of its concern that housing prices could rise too much if left unchecked.
The government said it would push for the building of more modestly-priced homes and, in another step to increase supply, would urge the selling of units before construction is completed. ‘With a rebound in the property market, some cities are seeing excessively fast housing price rises, and we should pay high attention to this,’ the State Council, or cabinet, said. The cabinet added that it was working to thwart speculators but would still support the acquisition of homes by owner-occupiers.
China’s main property price index rose 5.7 per cent in November from a year earlier, though increases have been far steeper in some cities. In Shenzhen, near Hong Kong, prices were up 16.6 per cent.
To dissuade house flipping for quick profit, the cabinet last week announced that individuals would have to own their homes for five years, up from the previous minimum of two years, to receive a tax exemption on their sale. But it has thus far maintained in place other measures such as discounted mortgage rates that helped stimulate the property market when it was flagging earlier this year.
Most economists are sanguine about China’s inflation prospects next year, and a Reuters poll yesterday showed that many also believe the government will be able to stave off a property bubble. But that could prove a tall order in certain parts of the country, especially in Beijing and Shanghai, said Yonghao Pu, Asia Pacific head of wealth management research for UBS.
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