Economy

Property developers struggle as govt cools market

(Xinhua)
Updated: 2011-05-09 11:02

Tougher control expected

The Chinese government has repeatedly stressed its efforts to rein in the runaway property market since last year and adopted measures including implementing tighter monetary policies, raising down payments, banning third-home purchases and imposing price control targets and a trial property tax.

The National Development and Reform Commission, the country's top economic planner, has regulated that property developers must sell homes at marked prices starting May 1 in its latest effort to contain property prices.

The move is aimed to tackle public complaints over a lack of transparency in commercial property pricing. But 11 property enterprises in Beijing were found to have violated the regulation, according to a ministry statement on Thursday.

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Despite these efforts, prices remain stubbornly high. Home prices in 100 major cities across the country rose 0.4 percent from March to April with 77 cities witnessing month-on-month increases, said a report by China Real Estate Index System (CREIS).

"The persistent fever might force government to implement tougher control policies later this year as ongoing measures are mostly meant to regulate the new-homes market," Zhang said.

This view was shared by the Chinese Academy of Social Sciences (CASS), a government think tank.

"It's very likely for the government to increase holding costs for people who already have several units of houses," said the CASS in an annual report concerning the real estate sector, indicating that the government should extend the property tax to more Chinese cities.

The property tax has so far only been trialed in Chongqing in Southwest China and Shanghai on East China's seaboard.

"Property taxes will help cool the market," said the report, adding that it will also encourage local governments to change from depending on sales of land for revenues, which is believed to be a primary cause of high property prices.