China moves to help housing market

Source : Business Times - 24 Feb 2009

Beijing may scrap curbs on purchases of second homes, official media say

China is considering a package of measures to provide long-term support for its residential housing market, including the scrapping of curbs on purchases of second homes, official media reported yesterday.

The China Securities Journal quoted an unnamed, authoritative source as saying that the National Development and Reform Commission, the top economic planning agency, was now reviewing proposals submitted by the construction ministry.

The package would aim to increase demand for owners to improve their homes, cut tax costs for people buying and selling homes, and help low-income people buy homes, the source said.

There are also proposals for the government to buy a small amount of housing stock to help it prevent excessive price fluctuations, and for steps to ensure that home buyers and developers receive ample long-term financing, the newspaper added.

Developers would be allowed to create real estate investment trusts (Reits) as soon as possible to bolster their funding, while rules restricting the amount of institutions’ investment in property would be abolished or relaxed.

The newspaper did not say when the package might be introduced.

The Shanghai Securities News quoted Cheng Siwei, an influential former lawmaker, as saying that the government had placed residential housing on its list of 10 major industries, which would receive policy assistance.

But it remains unclear what specific policies will result from this, partly because the authorities are still debating whether a policy package should focus on the property market’s current slump or its long-term development, the newspaper added.

Two government sources told Reuters yesterday that the State Council, or cabinet, did not plan to include the property sector in its list of industries to receive formal assistance packages.

Since last year, the government has announced a range of steps to aid the real estate market. In December, it cut business and transaction taxes for real estate sales, and said it would let people buy second homes on the same preferential terms normally reserved for those buying first homes, if floor space per person were lower than the average for the city where the homeowner lived.