A well-targeted property tax can become the government's best weapon in the battle to curb rising housing prices
A fresh rise in domestic housing prices is testing the tolerance of the government and public, and highlights the need to expedite a new round of fiercer regulations to rein in the intractable housing market.
According to the data from the China Index Academy, the average price of new homes in China's 100 major cities rose to 9,812 yuan ($1,577) per square meter in January, an increase of 1 percent from December and the eighth consecutive increase month-on-month. It is also 1.2 percent higher than a year earlier.
The price rises in some first-tier and coastal cities are well above this, with the average price of new homes hitting 25,075 yuan per sq m in Beijing in January, a growth of 2.27 percent month-on-month and up 5.93 percent from a year earlier. Shanghai's average price was 27,655 yuan per sq m, up 2.3 percent from December and up 1.72 percent from a year ago.
Statistics published by the National Bureau of Statistics on Jan 18 show that 54 of China's 70 major cities recorded a higher home price rise in December, and new home prices rose year-on-year in 40 of them, up from 25 in November.
It is disheartening that the price rises have come in defiance of the latest round of the "harshest-ever" real estate regulations and the authorities' repeated reaffirmation that they will continue to be applied. The regained momentum has once again cast doubts over the efficacy of the regulations.
In a bid to tame the restive housing market that has run amok following the 4-trillion-yuan investment rampage at the height of the global financial crisis, the Chinese government has embraced an array of measures over the past three years, ranging from raising the minimum down payment and adopting higher interest rates for second-home mortgages to putting a conditional ban on the buying of properties by non-local residents. A property tax was also launched in Shanghai and Chongqing on a trial basis. These moves cooled the red-hot housing market and ignited hopes that China's speculation-riddled housing market would be pulled onto a trajectory of healthy and reasonable development.
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