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New policy targets real estate prices
The State Council, China's cabinet, on Friday unveiled policy details aimed at reining in the country's property market, which has seen renewed signs of a rebound.

The policy details, released on the last weekday before the annual sessions of the top legislature and top political advisory group, highlight a series of tougher measures including imposing stricter income tax rules for home sellers and raising down payment rates for second home buyers.

The 2013 new policies
Housing price	●Local governments will be held accountable for curbing soaring home prices, and asked them to make specific schedules. The country's major cities, excluding Lhasa, have been asked to set annual price easing targets for newly-built homes and reveal these targets in the first quarter of the year. ●The central government will step up inspections of provincial-level governments' property market control work. Those who fail to meet their targets will be penalized.
House purchase restriction	●Homeowners who sell their homes will be levied an income tax as high as 20 percent of the profit they make on the transaction. ●Local branches of the central bank in cities with soaring home prices can increase the down payment rate and mortgage loan interest rate for home buyers purchasing a second unit. ●Non-local families with one home or more, as well as non-local families without a certain amount of years of tax payment certificates or social security payment certificates, will be banned from buying homes in the cities in which they currently reside.
Land supplies	●China will work to increase land supplies for housing, and the total amount of such land nationwide in 2013 should be greater than, or equal to, the annual average over the last five years. ●Cities and counties are required to make information on land supplies available to the public and reveal annual land supply plans before the end of March.
Government-subsidized housing	●The government will also accelerate construction on government-subsidized housing. The government aims to finish construction on 4.7 million affordable housing units and start construction on another 6.3 million units. ●By the end of this year, migrant workers should be included in the housing programs of the cities where they work.
Market supervision	●Local governments and related authorities to release authoritative information on housing construction, trade, home prices and rent in a timely manner. ●They are also required to refute false information about the property market and punish those who start and spread rumors. ●Local governments should build online information systems on the personal home ownership of urban residents. All major cities must be connected to the system by the end of 2015.
Example on sale of second-hand houses
If a home worth of 1 million yuan ($159,236) five years ago in Beijing is now sold at a price of 3 million yuan, the seller will be levied 400,000 yuan as income tax. The previous 1-percent policy just requires 30,000 yuan of income tax.
Effects on China's real estate market
●The policies will beef up tax and loan measures and make potential buyers to reconsider their purchase decisions. ●The tax hike will increase the cost of second-hand home transactions and hit speculative purchases in the property market. The heated second-hand transactions recently seen in several major cities will cool down.
Reactions
Government	Jiang Weixin, Minister of Housing and Urban-Rural Development ”I have confidence we can bring housing prices under control. We just need time to see the effects of the new regulations.”
Property developer	Liu Xiaoguang, chief executive of Beijing Capital Land, a property developer "The new policy shows the government’s intentions to cool down the property market. We should prepare well for any possible changes in the future."
House agent	Kong Dan, market analyst at 5I5J, a real estate firm ”We don't know when the new regulation will go into effect, so we’re helping our clients complete their deals as soon as possible. We’ve seen a marked increase in those seeking consultation over the past two days."
Resident	Wang Xueyu, Beijing resident "I originally planned on selling my house in Chaoyang district next year. But now I want to find a buyer as fast as I can. "
Background
●In December, 2012, 54 cities out of a statistical pool of 70 major Chinese cities, recorded higher new home prices than in a month earlier, according to the National Bureau of Statistics. This marked the third consecutive month of such increases. ●In February, 2013, the central government said in a guideline that it will strictly implement and improve housing market tightening measures and ensure that the policies remain steady.

View  Points

Media comments: New policies targeting housing prices ‘contradictory’

	These new measures send a strong message that the new government will continue to strictly regulate and control the property market.
	Industry insiders expect even stricter measures to be carried out after the Two Sessions.
	These policies would only cause prices on the secondhand market to spike, resulting in buyers maintaining a wait-and-see attitude in the short term.
	The China Times calls the measures "contradictory," saying "they're attempting to drive down soaring housing prices by tightening up the supply of land in cities with already expensive markets."

Weibo voices:

@360deepblue: There are two possible outcomes for the 20 percent income tax levied on transactions: it will either ultimately transfer to buyers and promote the price of second-hand market, or it may impact second-hand transactions but guarantee the sale of new houses and maintain land prices.

@Dong Fan: The soaring real estate markets in big cities are a reaction to limited purchase policies and excessive administrative interference. These ongoing control measures will hardly be able to reign in prices, and may even exacerbate them. 

@Ren Zhiqiang: These new measures are basically trying to cover up a lack in housing supply through restraining demand. This is absolutely not an effective and long-term way of solving the problem. The heavier levies on secondhand transactions, which intend to crack down on real estate speculation, will push even more buyers into the new property market and hurt the overall majority.

Former  Policies

Housing price controls in recent years
Time	Policy
Jan. 10, 2010	The State Council says it will maintain the minimum down payment for purchases of second homes at 40 percent.
Mar. 10, 2010	The Ministry of Land and Resources requires property developers to pay a 50-percent down payment on land acquisitions within a month of signing the contract.
Apr. 15, 2010	The State Council announces a rise in down payments for second-home buyers to a minimum 50-percent from 40 percent. First-home buyers must pay 30 percent if the property exceeds 90 square meters.
Sept. 29, 2010	Central government ministries issue new rules for all first-home buyers to pay a down payment of at least 30 percent of the purchase price. Banks are ordered to stop lending for third-home purchases.
Nov. 3, 2010	The Ministry of Housing and Urban-Rural Development blocks Public Housing Fund mortgages for third-home buyers.
Dec. 7, 2010	The China Banking Regulatory Commission orders lenders to tighten controls on their loans to the property sector.
Jan. 26, 2011	The State Council announces a rise in the minimum down payment requirement for the purchase of a second home to 60 percent of the property's value, previously set at 50 percent.
Jan. 27, 2011	The State Council approves the trial of a property tax in some cities. Shanghai and Chongqing trials the tax first.
Feb. 18, 2011	The People's Bank of China announces a rise in the bank requirement ratio by 50 basis points.
Macro policy on property market over the past decade
2003-2004	The government calls the real estate sector a “pillar industry” and increases credit to developers and construction companies.
2005-2008	Facing out of control housing prices, the government began to issue regulations to help curb property investment.
2008-2009	During the global financial crisis, the central government again encouraged purchasing property in order to maintain market growth.
2009-present	The government continues to attempt to control the housing market with further regulations.

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