If implemented, these new requirements would make it even harder for property developers to get funding, according to a report in the Beijing Times newspaper.
As it is, China has cut bank lending to developers and restricted them from raising money in the stock market. The China Banking Regulatory Commission, the banking watchdog, has clamped down on off-balance financing as well since the second half of last year, ordering banks to bring their off balance-sheet trust loans back onto their books.
Despite the crackdown, trusts have mushroomed to meet the demands of cash thirsty developers. In March alone, at least 35 property trusts were launched, totalling 9.8 billion yuan ($1.5 billion), double February's level.
Analysts are pointing out that a property tax in China is desperately needed to reverse the country’s imbalances in wealth distribution. According to Zhang Monan, a researcher with the State Information Centre the country also needs to improve its property reporting system and to levy taxes on various personal holdings, including on real estate, capital earnings, inheritances and donations.
China should also moderately shift some taxation powers to local governments from the central government to help extricate some local governments from excessive dependence on land for revenue, Zhang added.
The nation’s plan to raise the individual income tax threshold to 3,000 yuan from 2,000 yuan a month is an important step towards narrowing the wealth gap and fixing the country’s income distribution disparity, he explained.
Property price growth in China slowed in March but values were still up from a year earlier the latest figures from the National Bureau of Statistics show.
New home prices in the capital Beijing rose 4.9% in March from a year earlier, easing from a the 6.8% increase in February. While in Shanghai, the country’s financial hub, prices climbed 1.7% last month, down from 2.3% in February.
Of the 70 cities monitored by the government, 67 cities posted gains, down from 68 in the first two months, the data showed. The government said its real estate cooling measures are working.
About 40 cities said last month they will cap new property prices below annual economic and disposable per-capita income growth or keep them steady following the central government’s measures to rein in housing values.
China has also raised banks’ reserve requirements to cool inflation, and central bank Governor Zhou Xiaochuan said monetary tightening will continue for ‘some time’.
