Property tax for China’s richest city expected

 
The decision comes despite some officials claiming that no property taxes would be introduced for at least three years. It is believed the new tax on residential properties will be similar to the one currently levied on commercial real estate.
 
‘This should be the expanding of existing tax for commercial use properties to residential real estate. It may not need approval from the State Council for the tax because it’s a local tax,’ said Zhao Duo, a real estate analyst at Sealand Securities.
 
He added that there is also speculation that Shanghai will tax only new purchases of large homes so the impact would be relatively mild. Figures being discussed range from 0.8% to 1.5% annually.
 
The Chinese government has been stepping up measures to clamp down on property speculation to tame asset bubbles. It has raised banks’ reserve requirements three times this year and restricted pre-sales by developers, curbed loans for third home purchases, raised minimum mortgage rates and tightened down payment requirements for second home purchases.
 
Figures from the National Development Reform Commission published a few days ago show that the price of new properties in 36 of China’s major cities increased by 4% in April compared with March. The average price of second hand properties increased by just over 2% over the same period.
 
Property prices in 70 of the country’s larger urban areas have now increased for 14 consecutive months and April’s rise represents a figure close to the record high, the National Bureau of Statistics said.
 
However, the NDRC report does indicate that the Chinese government’s attempts to curb rises in its property market could be having the desired effect as the increase in prices and sales has stagnated slightly since these policies were implemented in the middle of April.
 
Other more local figures suggest prices are falling. According to data from Shanghai based UWin Real Estate Information Services prices for new homes in the city fell 16% in the week ending May 23.
 
But China should be cautious in introducing new tightening measures because the global economic environment is complex, according to Xu Lianzhong, an official with the National Development and Reform Commission’s price-monitoring centre.
 
‘As soon as the government policy is clear, whatever it is, the market will come back. What the market doesn’t like is there might be something more coming next week, then let’s just wait and that waiting doesn’t help,’ said Zhang Xin, chief executive officer of Soho China, the biggest developer in Beijing’s central business district.