China May Announce New Real Estate Controls This Month

China to announce new real estate restrictions

Will tightening the leash bring prices to heel?

New restrictions on China’s real estate market may be on the way as soon as this month, according to a recent article in the official China Securities Journal.

The decision regarding new curbs on the property market is set to follow the return of government inspection teams to Beijing after a review of real estate policy enforcement in the provinces.

China sent eight teams to 16 provinces during July to check on the implementation of its property curbs, and the nationwide check is aimed at “firmly” restraining property speculation and consolidating results of the curbs, the central government said on its website on July 25.

The Securities Journal suggested, depending on the results of the inspections, that the new policies could include raising the transaction tax on existing homes and expanding a property tax trial. The article also predicted that the measures may be put in place during August to avert further increases in property prices as the the market goes into its traditional high season during September and October.

In another official sign of the government’s intention to rein in property prices, an article in the China Daily predicted the spread of a property tax system following the government’s announcement of property tax training sessions for local tax bureau staff.

According to the article, more than 70 cadres from local tax bureaus are receiving training about the property tax system at Renmin University in Beijing. However, an official with the Ministry of Finance that was interviewed for the article indicated that a national property tax is not likely to be implemented before March 2013.

The renewed determination to control housing prices followed a substantial market rebound in July, when residential real estate prices rose 0.3 percent over the rate in June.

According to Caixin Online, the government’s inspection teams criticized the provinces of Hubei, Hunan, Hebei and Shandong for failing to strictly enforce the government’s real estate restrictions.