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Across the country house sellers scrambled to cut deals to avoid paying
a stiff tax on home sales introduced yesterday in a bid to curb spiralling
prices.
From the start of this month, a tax of 5 per cent will be charged on
the full earnings of all home sales if the property is sold within two
years of being purchased.
For luxury apartments and villas in this category the duty will apply
to the difference between the sale and purchase prices.
In cities where house prices have soared, the local government will
slap higher property tariffs on luxury houses.
Buyers of luxury properties in Nanjing, capital of Jiangsu Province,
will have to pay a 4 per cent tax, up from 2 per cent previously.
This is just one positive step in a co-ordinated
government strategy to cool the red-hot
property market and stabilize prices.
Other measures include a mortgage interest rate increase and
downpayment adjustment.
These moves are effective for curbing speculation, said Zhang Yan, a
property analyst at China Securities, but to bring prices down more action
must be taken.
Market insiders say many of the small and medium-sized property
speculation groups are on the verge of collapse.
As for house prices, experts say the market should not expect a quick
decline.
But property prices in some large cities have dropped since April. In
Shanghai, the average residential housing price dropped to 934 yuan
(US$113) per square metre from the middle of April to the middle of last
month.
But experts say the average price decline is mainly the result of a
dramatic decrease in turnover of high-priced houses. The municipal
government also recently launched an affordable housing project on the
outskirts of the city.
Prices will not fall a great deal if land and building costs do not
decline, and while demand is high. Developers are unwilling to compromise
by squeezing their profit margins, said Wang Deyong, an analyst at CITIC
Securities.
Zhang at China Securities said more should be done to improve living
environments, build more social facilities and equally distribute
resources, as house prices rely heavily on conditions in the surrounding
community.
Developers should be provided with more financing
channels to launch further projects, as the unbalance
of supply and demand is another key
factor contributing to high housing prices, said Wang from CITIC
Securities.
(China Daily) | 
Updated: 2005-06-02 10:48
