Housing tax prompts rise in transactions

2013-03-05 07:09:05 GMT2013-03-05 15:09:05(Beijing Time)

New measures announced last week to cool China’s residential property market triggered a surge in transactions in major cities. (Photo/Agencies)

New measures announced last week to cool China’s residential property market triggered a surge in transactions in major cities over the weekend, the Shanghai Securities News reported on Monday.

On Friday, the State Council, China’s cabinet, announced a steep 20 per cent capital gains tax on home sale profits - a move which sent mainland property developers’ shares falling.

Purchasing second homes have also been made harder as cities with “excessively fast” price gains were ordered to raise down-payment requirements and interest rates on second-home mortgages.

Shanghai real-estate trading centers were packed with busy buyers and sellers on Saturday morning.

“I’ve been in [the industry] for a number of years now and its not the first time sudden policy changes have triggered panic-like trading in the market,” a sales agent, surnamed Wang, said.

“However, the 20 per cent tax this time is too high and both buyers and sellers will find it hard to absorb,” he said.

Wang also said the busy period would only last a short-time because and once the tax took effect, the secondary market would probably become “deserted”.

The National Development and Reform Commission said on Tuesday it would boost the supply of medium, small-sized homes this year and keep differentiated curbs, home mortgage and tax policies. The government will steadily curb speculative property demand and gradually expand the property tax trial.

It is still not clear when the new tax will come in.

On Chinese social media, photos surfaced of real-estate transaction centers, such as the one in Pudong, packed with people as late as 11pm in the evening.

“This type of crazy herd mentality is not new in China,” one netizen posted on Sina Weibo. "Hopefully this will have an impact on speculators."

Beijing experienced a similar frenzy. The number of units listed for sale at one Beijing estate agency surged by nearly 40 per cent one day after the announcement, the Economic Information Daily newspaper said on Monday.