China Mulls New Real Estate Rules
Thursday May 12, 2:43 am ET
Chinese Ministries Propose New Rules to Curb Real Estate Price Hikes
SHANGHAI, China (AP) -- China is mulling a wide range of options to curb surging real estate prices in its latest effort to discourage speculative dealings and ensure a supply of affordable housing, state media reported Thursday.
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The joint campaign by seven government agencies reflects a decision by Beijing to make cooling the housing market a priority, the official Xinhua News Agency reported.
Average real estate prices rose by 14.4 percent year-on-year in 2004 and by 12.5 percent in the first quarter of 2005. Shanghai had the "most shocking housing prices in China," with average costs per square meter (3.28 feet) of over 10,000 yuan (US$1,200; euro940), the report said.
It noted that the proportion of affordable housing in the market had declined to 4.6 percent last year, compared with 6 percent in 2003.
At the request of the ministries, the State Council, China's Cabinet, issued an order to local governments to make controlling property prices a major part of their economic policy.
The measures were proposed Wednesday by the Ministries of Construction, Finance, and Land and Resources, along with the State Development and Reform Commission, the State Administration of Taxation, China Banking Regulatory Commission and the People's Bank of China, China's central bank, Xinhua said.
The proposals included a call for local governments to clarify prices and housing sizes before granting land use rights, limiting credit for property deals and confining real estate developers' profits to a maximum of 3 percent. Developers who fail to build within a year after buying land will also be punished, and taxes will be raised on sales of homes that were occupied for less than two years after their purchase.
Developers who fail to build within two years after buying property would lose their rights to the land, Xinhua said.
It was not clear when the proposals would be implemented.
The proposals follow more piecemeal measures by local governments, including Shanghai, to stem surging prices.
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