China to Overhaul Housing Market
China's decision to pilot five-year property tax levies in selected cities is one of the most profound changes to China's real estate market after decades of reshaping. It is neither a signal of a crackdown on the country's housing market nor an obstacle to its economic growth, experts said. Instead, it is for the purpose of guiding rational consumption of housing and economical use of land resources to promote the steady and sound development of China's real estate market. How to make the property tax acceptable to middle-class families in China and make them feel the positive impacts as soon as possible is the key to the success of the pilot program, but housing prices will never plunge in China as the country would not allow the introduction of a property tax reform possibly leading to the collapse of its real estate market, experts said. The upcoming pilot program, with a clear timeline, is a mid-to-long-term arrangement, showing a proactive and prudent attitude taken by the central government on real estate reform. The property tax is unlikely to let house prices in first tier cities such as Beijing and Shanghai deviate from a long-term upward curve during the high-speed urbanization in China, but it will reduce the slope and amplitude of this curve, and especially curb unscrupulous speculation. Meanwhile, the property tax will help optimize income distribution and property allocation, experts noted. At present, there is a wide gap in house allocation. Some people have dozens or even hundreds of houses, while some can't even fulfill their basic housing requirements & we should give full play to the role of property tax in preventing and suppressing speculation, reducing the vacancy rate, adjusting income distribution and property allocation, and curbing the polarization of income disparity. For many years, runaway housing prices have put a great financial burden on Chinese families. In 2020, the total market value of China's housing was around at $62.6 trillion, nearly double of that of the US ($33.6 trillion) and six times of that of Japan ($10.8 trillion), according to statistics by Chinese economist Ren Zeping's team. Experts believed the property tax may finally tame the spiking house prices in China.
Tags : INTERNATIONAL property tax China urbanization housing prices economic growth housing market Property Allocation Land Resources