Stricter measures to cool property market

BEIJING - Amid expectations of rising housing prices, China's central government on Friday rolled out specific rules to further tighten control of the property market.

The government said in an online notice that homeowners who sell their homes will be levied an income tax as high as 20 percent of the profit they make on the transaction.

Prior to the new rules, income tax was 1 percent to 2 percent of the sale price.

The notice said local branches of the central bank in cities with soaring home prices can increase the down payment rate and mortgage loan interest rate for home buyers purchasing a second unit.

Non-local families with one home or more, as well as non-local families without a certain amount of years of tax payment certificates or social security payment certificates, will be banned from buying homes in the cities in which they currently reside.

The notice also said local governments will be held accountable for curbing soaring home prices, and asked them to make specific schedules.

The central government said it will step up inspections of provincial-level governments' property market control work. Those who fail to meet their targets will be penalized.

The country's major cities, excluding Lhasa, have been asked to set annual price easing targets for newly-built homes and reveal these targets in the first quarter of the year.

The notice said China will work to increase land supplies for housing, and the total amount of such land nationwide in 2013 should be greater than, or equal to, the annual average over the last five years.

Cities and counties are required to make information on land supplies available to the public and reveal annual land supply plans before the end of March.

The notice also asked local governments and related authorities to release authoritative information on housing construction, trade, home prices and rent in a timely manner. They are also required to refute false information about the property market and punish those who start and spread rumors.

According to the notice, local governments should build online information systems on the personal home ownership of urban residents. All major cities must be connected to the system by the end of 2015.

Zhang Xu, a market researcher with HomeLink, a leading property broker firm, said the policies will beef up tax and loan controlling measures and make potential buyers to reconsider their purchase decisions.

Li Chang'an, an economics professor at the University of International Business and Economics, said the income tax hike will curb second-hand home transactions, but have a limited impact on first home purchases.

However, Li also said it will be difficult to determine the profits homeowners make during transactions, as it would be hard to know how much a home cost when it was purchased by the seller.

Zhu Zhongyi, vice president of the China Real Estate Industry Association, said revealing government policies and market information to the public will help people make rational home purchase decisions.

Zhang Dawei, a senior researcher with Centaline Property, said a clear timetable will force local governments to work accordingly and facilitate public supervision over government work.

The housing market experienced a short cooling-off period starting in 2010, when tightening policies like higher down payments and restrictions on third-home purchases were introduced.

But the market began to heat up last year after the central government put more emphasis on economic growth.

Last December, 54 cities out of a statistical pool of 70 major Chinese cities, recorded higher new home prices than in a month earlier, according to the National Bureau of Statistics. This marked the third consecutive month of such increases.

In February, the central government said in a guideline that it will strictly implement and improve housing market tightening measures and ensure that the policies remain steady.