Editorials

A local cure to home prices

(China Daily)
Updated: 2010-03-26 07:51

With urban housing and land prices hit-ting new highs on a daily basis, local governments must do something immediately to help the central government in preventing the real estate bubbles from bursting.

The Chongqing municipal government reportedly submitted a proposal recently to the central government to introduce a special property tax on high-priced homes.

This local attempt to rein in excessive growth of housing prices is a worthwhile attempt that the central government should support quickly.

Despite the central governments' tough talks against property bubbles since the end of last year, housing prices in China's 70 large- and medium-sized cities increased 10.7 percent in February from a year earlier, the fastest rate hike in 20 months.

Earlier this month, the land price record for residential housing in Beijing was broken twice in a day because of aggressive bidding by State-owned property developers.

Clearly, passive measures will not work to cool the housing market as the government had hoped they would.

Under these circumstances, the idea by the Chongqing municipal government to tax purchases of high-priced homes becomes even more imperative.

By imposing an additional tax on houses priced at more than three times the average price of residential homes, the local government may both check speculative purchases of luxury homes to slow the rise of overall property prices and raise funds for much-needed public rental housing.

Chongqing is yet to translate its brave idea into a bright reality. But the central authorities can now encourage more local governments to explore new solutions to tackle intensifying housing problems.

(China Daily 03/26/2010 page8)