China's property shares index ends up 4.6 per cent
(BEIJING) Chinese real estate stocks surged yesterday after a report said that a speculated property tax will not be introduced for at least three years, even after the government researcher quoted in the story denied making the comments.
Chinese property companies have been under pressure since the central government unveiled harsh measures in mid-April to cool the sizzling sector, including raising down payment requirements and mortgage rates for second homes.
Real estate stocks rallied strongly yesterday after a weekend report in the Beijing-based China Times, which quoted Huang Hanquan from the National Development and Reform Commission (NDRC) as saying that the government would not impose a property tax within three years.
However, Mr Huang denied making the comments.
'It is purely an unfounded report, and I have never said that,' Mr Huang, a rural economy researcher at the NDRC, said.
Although the NDRC is China's powerful economic planning agency, it is not the main government organisation overseeing the country's tax regulations, which are typically shaped by the finance ministry and tax bureau.
Despite the denial, China's property shares index closed up 4.6 per cent, helping the broader Shanghai Composite index post its biggest one-day percentage gain in more than seven months, ending up 3.5 per cent.
China Vanke, a major property counter, was up 4 per cent, while Poly Real Estate ended 8.8 per cent higher.
The property index had lost 24 per cent since the start of this year and 16 per cent since mid-April when the measures were announced.
Apart from the central government's measures, local governments sometimes draft tougher rules, but some cities and provinces, except for Beijing, have not done so. Beijing's local government said in late April that it will allow each household to buy only one home, on top of the central government's measures.
New rules unveiled over the past week by the cities of Guangzhou, Shenzhen and Chongqing, and the Zhejiang provincial government mainly stuck to the central government's mid-April measures.
As a result, investors now expect China to pause its tightening campaign, as the government assesses initial results, which are evident from declining transactions and slower housing price rises this month.
'China will ease its pace of macro control in the short term in order to stabilise the economy,' Fang Yan and Ou Ruiming, analysts at Guosen Securities, said in a note to clients.
The market expects China to introduce a property tax if prices fail to ease significantly.
Shanghai could roll out a property tax on a trial basis by slapping a 0.6 per cent tax on residents who own large apartments, according to market sources.
China's property prices have been soaring, hitting a record annual 12.8 per cent rise in April, although analysts expect price increases to ease in coming months. -- Reuters
Source: Business Times, 25 May 2010