BEIJING - China will not launch taxes on holdings of more than one residential apartment for at least another three years, a government think tank official has said. Meanwhile, many economists continue to warn that the country's economy could slow down amidst property tightening policies and outside uncertainties.

"Taxes on holding of residential properties is impossible at least for another three years," Huang Hanquan, assistant director of the industrial institute of the National Development and Reform Commission (NDRC), the nation's top economic policymaking agency, was quoted by China Times as saying on Sunday.

As China's home prices continue to soar amid growing public complaint, the authorities have issued a series of tightening policies, with some experts forecasting that taxing more than one residential property could deal a final blow to the housing sector.

The new tax, which is quite similar to a property tax, will increase the cost of holding more than one apartment and thus prevent speculation, which is considered the major factor for surging home prices.

Huang's comment, if true, would be the latest official confirmation that no further major tightening measures are in the pipeline.

It would mean lifting of the Damocles sword currently hanging over the developers and the real estate stocks in the domestic A-share market. The stock market has suffered several big-margin sell-offs in recent weeks due to concerns of pending taxation measures against the sector.

Chinese laws have such taxes on commercial properties, but changes in the taxation on residential housing would require revision of existing laws, which would first need to get the nod from the central government, Huang said.

Rumors have been flying that the local governments would launch such taxes, which is impossible in the near term, he said.

Analysts said the failure to launch such taxes is because the overall economy faces multiple uncertainties and if further tightening measures are taken, the slow-down of the real estate sector, which accounts for about one-fourth of the country's fixed-asset investment, could dampen investment and drag down the country's economic growth.

"Once the real estate market and the stock market both enter the downward track, they would, in turn, affect economic growth," said Wang Jian, executive secretary-general of China Society of Macroeconomics.

"The downward pressure on the Chinese economy is increasing," said Liu Yuanchun, a senior economist at the school of economics at Renmin University of China.

Control of heavy energy-consuming industries, changing export prospects, and possible yuan appreciation would all have the potential to slow economic growth, he said.

The European debt crisis, meanwhile, would also affect investor confidence in the economy, analysts said, making policymakers more cautious over making any major tightening actions, including those aimed at the real estate sector.

Link to original article
http://www.chinadaily.com.cn/china/2010 ... 882335.htm

i guess you should have also noticed that yesterday an official from the State Administration of Taxation was quoted as saying that such a statement was that researcher's own opinion, therefore did not represent the attitude of the central government, though this official from SAT did not directly affirm the possible expansion of the current tax on holding properties to cover residential property. At present, such tax on holding properties applies to operational properties.

Again, people are left in wonder about what wil come up next.

Doroto wrote:Again, people are left in wonder about what wil come up next.

Ha-ha. What will next ? Prices will doubled or tripled again. As said - "show must go on."

well, while i personally hold that in a long run, Chinese residential property will still go up further. However, given the new regulation curbing speculation in real estate sector, i am inclined to think the future price increase will be at rational pace.

It seemed domestic investors were pouring their money into commercial real estate.

Shanghai real estate prices are a puzzling phenomenon that has more in common with a bubble economy than a property market. Prices are far beyond what is affordable for ordinary people. The majority of the buying and selling occurs among investors and speculators. These buyers don't need homes because the majority already have them. And most don't seem to want to put new apartments out to rent because it immediately decreases their value because they're "used".

People are buying these apartments the way westerners as long term investments the way westerners in developed countries would buy bonds. The "bet" underlying their decision to buy is that they will be able to sell them for even more than they paid at some time in the future. But who will buy them in future at these prices? Only another investor because they're not affordable for most as residences. That means the Shanghai property market operates like a fool's game -- each investor is betting there's a bigger fool than he who will buy it from him in the future. How long can this last?

And the government isn't helping with its frequent "warnings" that it will impose a tax, but nothing seems to change. No new tax is announced, no details are offered, and no one has enough information to calculate the impact of the supposed new tax on investment returns. This is either incredibly incompetent regulation or deliberate disinformation. It's hard to say which is worse.

Some different sound in today news

Published on Taipei Times
http://www.taipeitimes.com/News/worldbi ... 2003474443

China property woes worse than US’

AFP , BEIJING
Wednesday, Jun 02, 2010, Page 10
China’s housing market problems are worse than those in the US before the global downturn as they could stoke public discontent, a central bank adviser has warned.

The comments were made before China’s State Council, or cabinet, announced it would “gradually reform the real estate tax” — the first official sign of a possible annual levy on residential housing aimed at reining in soaring prices.

“The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the US and UK before your financial crisis,” a member of the bank’s monetary policy committee, Li Daokui (李稻葵), said.

“It is more than [just] a bubble problem,” he told the Financial Times in an interview published yesterday.

The property market in the US collapsed as too many people were unable to repay their high-risk mortgages, leading to a credit crunch in which thousands lost their homes and lending dried up.

China has recently introduced a range of measures to prevent the growth of asset bubbles and soaring property prices.

Authorities have tightened restrictions on advance sales of new property developments, introduced new curbs on loans for third home purchases and raised minimum downpayments for second homes.

The latest tax plan was expected to discourage property speculation and help replenish the coffers of local governments, which have been depleted by an investment binge over the past year, Chinese media reports have said.

A property tax is likely to be imposed on a trial basis in Beijing, Shanghai, the southwestern municipality of Chongqing and the southern city of Shenzhen by the end of this month, state media said previously.

China currently has no such levy on residential property but does impose a 1.2 percent tax on 70 percent to 90 percent of the value of commercial real estate.

The State Council also approved a plan to encourage the withdrawal of state capital in “­general ­competitive sectors,” in an apparent effort to reduce the amount of government-backed investment in the red-hot property market.

Li said recent moves by Beijing to rein in the property market needed to be part of a long-term push to bring high housing prices under control, the Financial Times reported.

He warned the high cost of housing could hamper future growth by slowing urbanization. Rising prices were also a potential political flashpoint, especially among younger people who felt locked out of having their own home.

“When prices go up, many people, especially young people, become very anxious,” he said. “It is a social problem.”

I know our Land Lady, Lowered our Villa rent, and is agreeing to every demand I have ask her for, to keep from us from Moving. She owns a lot of property in Shanghai, most of it is sitting empty.
Even as cheap as our rent has become, It is still way out of Line for the average Chinese worker.
With everything else going on in the world, that is negative(Financially), I know something is going to burst, and soon! If I was forced to Buy in Asia, I would buy in Hong Kong.

Mr Totomolo wrote:Published on Taipei Times
http://www.taipeitimes.com/News/worldbi ... 2003474443
...
The latest tax plan was expected to discourage property speculation and help replenish the coffers of local governments, which have been depleted by an investment binge over the past year, Chinese media reports have said.
...
The State Council also approved a plan to encourage the withdrawal of state capital in “­general ­competitive sectors,” in an apparent effort to reduce the amount of government-backed investment in the red-hot property market.

so the gov't is on both sides of the coin...invested/investing heavily in the property market and also trying to curb prices at the same time. haha... some conflict of interest there. i wonder who will win?

so when the gov't starts to increase their property sell-off, we can take it as an early indicator that legislation is coming soon to clamp down on prices? there is bound to be some "insider trading" going on here.

...
He warned the high cost of housing could hamper future growth by slowing urbanization. Rising prices were also a potential political flashpoint, especially among younger people who felt locked out of having their own home.

what's so bad about slowing urbanization? china's major cities where price inflation is most rampant are already overcrowded and among the world's biggest. seems to me like slowing urbanization might be a good thing. maybe except for cheap labor in the cities...

^ I think the bigger problem is the potential for unrest. 60+ years ago, Chinese peasants rebelled against a system in which the country's wealth was hoarded and controlled by the rich. Today, it would be very easy for the young and the poor to conclude that the country's wealth is being hoarded and controlled by the rich once again. I wouldn't want to be in China if/when that day comes.