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Beijing, Shanghai's detailed property curbs receive mixed reaction

Source:Globaltimes.cn Published: 2013-3-31 16:58:00


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Property curbs 'strictest' yet
Chinese major cities including Beijing, Shanghai and Chongqing announced detailed regulations to cool down the housing market over the weekend, following the central government's call to curb property prices in early March. But some industry insiders remain skeptical of the effectiveness of the new rules.

Beijing, Shanghai announce detailed property curbs
The municipal governments of Chinese capital Beijing and business hub Shanghai on March 30 spelled out detailed rules aimed at cooling the property market following the central government's fresh regulatory plan earlier this month.

China's real estate registration announcement welcomed

A government circular announcing that China will spell out regulations on real estate registration before the end of June 2014 has received a warm welcome in media on March 29.


Highlights of the detailed property curbs
●Beijing will strictly implement the 20-percent tax on capital gains from property sales, but the tax will be exempt if the property is the seller's only one and they have owned it for five years or more.

●Single adults with a permanent Beijing residence registration, who have not made purchases in the city before, are allowed to buy only one apartment.

●The city will raise down payments for second-home buyers.
●Shanghai said banks will be banned from giving loans to local residents who are buying a third apartment or more, according to a government announcement.

●Shanghai vows to strictly implement the 20-percent tax on capital gains from property sales.

●Shanghai will raise down payments for second-home buyers.

                 Reaction: Marry or Divorce?

Background:

On March 1, the Chinese government introduced a series of new rules to rein in skyrocketing housing prices, the most eye-catching of which stating that property owners have to pay a capital gains tax of 20 percent when selling property that is not their only residence.

Thanks to a loophole, couples with two properties can avoid the tax by getting a divorce, putting the property they wish to sell into one person's name, and putting it up on the market as the owner's single property. After it sells, they can remarry.

However, according to the announcement made by the Beijing Municipal Government on March 30, single adults with a permanent Beijing residence registration, who have not made purchases in the city before, are allowed to buy only one apartment.

Now, divorce is out, and marriage is put on the table.


Comments:

●Global Times
Some experts argue that the new rules will do nothing to curb soaring house prices. On the contrary, they contend, the policies will harm the legitimate interests of home buyers despite demand.

But since these policies have just come into effect, it is still unknown whether they will have the effect the government hopes for.

In addition to a possible economic shake-up, fake divorces are inducing the corruption of people's belief in love and morality.

Xinhua Daily – Zhang Hongwei, director of research at Tospur, a real estate consulting company
The restrictions on unmarried buyers are temporary and will not largely affect the market. However, since the new rule allows families to buy two homes, it may motivate potential homebuyers to get married, canceling out any intended effect.

●qq.com – Xie Baisan, director of the Institute of Financial and Capital Markets at Fudan University
Single buyers can simply seek to marry and then divorce to get around the restrictions. The more crucial problem affecting housing prices is the vast flow of money circulating in the market.

●ifeng.com – Hu Jinghui, vice president of B.A. & 5I5J Group

While the policy targets in detail those attempting to circumvent the restrictions by seeking divorce, it also grants families with children the ability to buy another home.

●qq.com – Dong Fan, head of the Real Estate Research Center at Beijing Normal University
The detailed restrictions discriminate against those who have divorced. They will not only be unable to buy property for their children, but also for their parents.

●qq.com – Hua Sheng, economist
These changes in policy are a reaction against couples seeking divorce to circumvent restrictions. Single people simply do not need two homes. Rather, the policy is designed to benefit those who do not own any property.

                              Viewpoints

●People’s Daily (Weibo)
These detailed policies show the Party’s determination to reign in the property market. Behind the rising prices is the persistent imbalance in supply and demand, and we need to control local governments’ reliance on land sales for revenue. It’s the responsibility of local governments to supply housing, while corrections to the real estate market should occur separately. Only then will housing prices stabilize.

Chen Zhiwu, secretary general of the Beijing Real Estate Association
"The curbing policies are designed to optimize the allocation of housing resources," Chen said, adding that “the target of policy regulation is to make the housing return to its nature of residence, instead of investment object.”

●Li Wenjie, director of Beijing Real Estate Agent Association
The rules may be effective in the short term, but increasing land supply and collecting property tax from house owners can yield better result.

●Economist Ma Guangyuan
"The purchase limit policy will not last forever. It should be replaced by long-term effective measures."

●Zhang Dawei, chief market analyst with Beijing-based Zhongyuan Real Estate
The impact of buying control and differentiated credit policy will be limited but it will help stabilize the market expectation.

Home buyers are eager to purchase houses because they expect a rising real estate price. The new rules will cool the property market, and help bring down the price to a rational one, Zhang said.

●Li Yu, a 27-year-old while collar
"I don't think the rules can impose any restrictions on those who have two or more houses. And those who in need of a house still cannot afford one," she said.

●CNTV – Ding Yifan from the State Council’s Development Research Center



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