Govt official confirms that a property tax will be introduced in China
China may introduce a property tax as early as the first half of next year although first homes are expected to be exempt.
It is the latest move in a bid to cool the country’s raging real estate market and further interest rate rises are not being ruled out.
Jia Kang, head of the Ministry of Finance’s research institute, told the China Securities Journal that China will shift to a prudent monetary policy.
China’s Ministry of Housing and Urban-Rural Development has announced it will block the Public Housing Fund (PHF) mortgage for third home buyers, in yet another move to curb property speculation.
The announcement was made in a circular jointly issued by the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, People's Bank of China, and the China Banking Regulatory Commission.
There will also be restrictions on some second home buyers. Those with a per capita living area higher than the local average level cannot apply for the PHF mortgage, according to the circular.
Minimum down payments for second homes buyers are no less than 50% of the total price, and the PHF mortgage interest rate will be slightly more for second home buyers than first home buyers, the circular added.
The ministry did not specify when the regulations would come into effect but they come on the back of and increase in PHF mortgage rate to 0.18% announced on October 20.
Established in the 1990s, the PHF scheme was designed to help medium and low income workers to buy homes. Employees are required to contribute 5 to 12% of their salaries to the fund, with their employers contributing the same amount.
PHF mortgage loans carry lower rates than commercial mortgages. Bank loans with a maturity of five years or more, for example, now carry a rate of 6.14% in China.
Property prices are still climbing despite the efforts to cool speculation. Prices in 70 major Chinese cities rose 9.1% year on year in September, data from the National Bureau of Statistics (NBS) showed.