| Global Times | 2013-3-4 0:00:00
By Zhang Ye
Industry analysts said a newly-unveiled policy aiming to further rein in sky-high housing prices will cool down the existing housing market but cause surges in both the sales and prices of new homes.
The policy, issued Friday by the State Council, imposed a 20 percent tax on profits from second-hand home sales, classified as personal income tax. Current policy requires home owners to pay 1 to 2 percent of the sales price when reselling their houses.
The effective date of the new regulations has yet to be disclosed, but more details are expected to be unveiled by local governments in April.
Most secondhand houses sold in the current domestic market were bought before 2008, which are commonly sold at prices over three times the original price, Yang Shaofeng, general manager of the Beijing Lianda Sifang Real Estate Brokerage, told the Global Times Sunday. He estimated that the personal income tax on a home bought at 1 million yuan ($160,700) several years ago may increase by 370,000 yuan based on the new rules.
This tax increase will not be welcomed by either sellers or buyers and will prompt many domestic residents, especially those in big cities, to sell or buy secondhand houses as soon as possible, Chang Qing, a researcher from the Beijing-based real estate agency Homelink, told the Global Times Sunday.
Data from the Beijing Municipal Commission of Housing and Urban-rural Development indicated that the volume of secondhand housing transactions completed on Saturday reached 1,059 suites, totaling 98,578 square meters, compared to 746 suites totaling 72,462 square meters the previous day.
The same case also occurred in Shanghai, where residents on Saturday crowded the local real estate trading centers to transfer ownerships of their houses as soon as possible and expressed strong concerns over the newly-unveiled personal income tax, the Oriental Morning Post reported Sunday.
Despite the urgent demand for secondhand housing, the current resale prices are unlikely to increase too much, given that many sellers also want to finish the deal before the new policy is enforced, Chang said, adding that sellers could not expect buyers to pay all the taxes as before.
Chang pointed out that this situation will disappear after April when local governments are expected to enforce these new property control measures and some house resellers are likely to turn to the renting market, predicting that resale prices may drop during the second half of this year.
These new measures mainly target speculators in the domestic real estate industry and will have a positive impact on this sector in the long run, but the prices will continue to grow due to the lack of land resources, the Nanfang Daily cited Zhang Zhaoxing, a deputy to the 12th National People's Congress and general manager of the Yue Xiu Group as saying.
However, according to a public opinion survey released by the People's Daily Sunday, 10.2 percent of domestic Web users said the new measures would be unable to rein in property prices, while 29.44 percent were concerned about the likely increase in resale prices, with 14.21 percent believing that the prices of new homes will surely increase.
Yang predicted that the government's new efforts will have two major results - an increase in resale prices to offset the high taxes and increased demand for new houses as opposed to the stronger need for secondhand housing due to the rigid policies on the domestic housing market.
He said that these new rules were not well planned and do not complement the market situation, which could only cause more burdens for home buyers.
Ren Zhiqiang, an outspoken real estate boss, commented on his Sina Weibo Saturday that the new policy just copies previous mistakes.
Pan Shiyi, chairman of real estate developer SOHO China, said on his Sina Weibo Sunday that the property taxes should be imposed on owners who resell their third houses instead of being imposed on all secondhand housing transactions.
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