Property tax holds promise for deflating real estate bubble

A potential homebuyer checks out a property project in Hangzhou, Zhejiang province, Dec 17, 2016. [Asianewsphoto by Long Wei]

BEIJING HAS INTRODUCED NEW MEASURES to cool its real estate market. At least eight banks have raised their mortgage interest rates, and five no longer accept personal applications for loans if their pledges are commercial real estate. The Mirror, a Beijing-based newspaper, comments:

These cooling measures come at the right time. As property prices in the capital have continuously risen, hot money rushed into the realty market. If that trend continues, the ever-growing bubble in the housing market would pose a challenge to the national economy.

The falling number of secondhand house deals best shows that the measures are quite effective. According to realty agencies, the number of secondhand house deals registered via online platforms in April was 16,902, 35 percent lower than the figure in March and 36 percent lower year-on-year.

But while applauding the firm actions taken by the authorities to curb speculation, we also hope they can take into consideration the needs of those who sell smaller apartments to buy a bigger one to meet their needs.

According to the current regulations, these people need to pay higher down payments as well as higher interest rates for their housing loans, even the tax and administrative fees for their deals are higher.

Some people want to buy a bigger apartment because they have growing families. Such buyers are not speculators. It is time to distinguish them from speculators and consider giving them tax incentives and other favorable policies.

On Wednesday, the Standing Committee of the National People's Congress, the nation's top legislature, announced its 2017 legislative work plan, according to which a property tax will be considered. By taxing those who own two or more houses, a property tax would be an effective way to curb speculation.

That move is also long-term because it will be part of the law. We look forward to the introduction of a property tax as it will help root out speculation from the realty market.