The Chinese government has approved property tax trials on some housing in Chongqing and Shanghai, in addition to measures unveiled earlier this week as part of its campaign to curb asset bubbles and property speculation.
Shanghai will start trials today, it said yesterday on its website. China recently said it will increase the minimum down payment of second-home purchases and asked local governments to set price targets for new assets.
The government will “resolutely” impose controls on the property market in the first quarter of 2011, including increasing supplies of affordable housing and curbing speculation, said Premier Wen Jiabao.
Real estate prices surged for a 19th month in December, even after the government’s suspension of third-home purchases and restriction of loans to developers.
“The property tax followed (26 January) housing curbs and shows China is serious in cracking down on housing prices,” said Jeffrey Gao, a real estate analyst at Royal Bank, prior to the announcement. “If home prices still climb, it will be a failure after this latest round of curbs.”
The Shanghai rate is “temporarily fixed at 0.6 percent for all taxable housing, and is reduced to 0.4 percent for houses bought at prices less than twice the average of newly built commercial homes last year,” the government said.
The local statistics bureau will release average sale prices on an annual basis.
In Chongqing, the tax will apply only to homes purchased at more than twice the average price, while units bought at over four times the average price will be taxed at 1.2 percent, said Mayor Huang Qifan in a live webcast People.com. Trials in Chongqing also start today.