China moves to cool real estate sector, curb prices

• Source: Global Times
• [07:55 December 10 2009]
• Comments

A clerk talks to a client at a housing sales office. Photo: IC

By Zhao Qian

The Chinese government intensified its efforts to cool the country's overheated real estate industry Wednesday.

A policy was allowed to expire that had eliminated the turnover tax for those who sold homes they had owned for more than two years. From now on, the tax will instead be waived only for those selling homes they have owned at least five years.

The new guidelines were released following an executive meeting of the State Council chaired by Chinese Premier Wen Jiabao Wednesday.

The original policy – the one that benefited those who had owned their homes at least two years – was enacted by the Ministry of Finance and the State Administration of Taxation to boost the real estate market, which had been hurt by the global financial crisis.

"Suppressing second-hand home sales is an effective way to prevent speculation in the real estate industry," Zhang Huaxue, assistant manager of the China Index Academy, a real estate research institute, said Wednesday, adding that home prices had soared unreasonably since the second quar-ter this year.

China will increase the supply of low cost housing in the future and curb the speculation in the real estate market, Zhang Ping, director of the National Development and Reform Commission, said Wednesday.

"Judging from all the clues above we can see that the government may try its best to suppress the overheated real estate industry next year," Zhang, of the China Index Academy, said.

Ensuring residents with lower income have housing is another possible way to cool the real estate industry.

On December 3, Wen said in Shanghai that China would enact fiscal, financial and land policies to support the construction of low-income housing.