Real estate registration

The timetable for a regulation on real estate registration announced by the State Council is a necessary step toward building an open and transparent national property information platform.

According to the document issued on Thursday, a unified system on real estate registration intended to protect the security of property transactions and effectively protect the legal rights of property owners, will be introduced and implemented next year.

Such a system will remove some of the obstacles to the adoption of a nationwide property tax, which is one of the most forcible cards the government still has left to play in its bid to cool the domestic housing market.

The rising momentum in house prices, which has accelerated since the last quarter of 2012, has caused growing concerns over the busting of the already-dangerous housing bubbles and prompted the government to announce on March 1 that homeowners will have to pay a 20 percent capital gains tax when they sell property, instead of the 1 percent tax on the gross selling price that is more widely adopted at the moment.

Because there is no definite date for when this will come into effect, people have been rushing to sell their property before it comes into force.

Domestic secondhand housing sales and prices, especially in some first-tier cities such as Beijing and Shanghai, witnessed their fiercest-ever increases in March.

The price hikes have once again put the government in an embarrassing situation, as it has failed to curb house prices despite the several rounds of regulatory measures, such as higher down payments and differentiated lending interest rates to second-home buyers, that have been adopted in recent years.

Speculation has played a big role in fueling rises in China's housing prices over the past decades. But regrettably, no well-tailored policies have been put in place to crack down on completed speculative purchases, although some measures have been adopted to prevent new speculative purchases.

Increasing the cost of holding multiple properties will further curb real estate speculation and force more property on to the market. This will help meet the demand for accommodation and thus bring down prices.

The proposed realty registration system, if it is followed by a targeted property tax, will be instrumental in taking the heat out of the real estate market.

(China Daily 04/01/2013 page8)