SHANGHAI • China's land ministry will reduce or stop issuing land for development of residential housing projects in cities and other areas where there is a supply glut, state television reported yesterday, citing details from a ministry meeting.
The ministry will increase land allocations in cities which have allowed migrant workers to buy urban homes, the broadcaster reported, referring to a measure which has been introduced to help reduce oversupply in the housing market.
China has issued a series of measures designed to boost the housing market and uplift the economy.
Last Friday, it said it would lower transaction taxes for second-time home buyers and some first-time home buyers in many cities and, earlier this month, policymakers announced a reduction in the minimum down payment required for first- and second-time home buyers in most cities.
China will set the deed tax at 1.5 per cent of the home's value for first residences bigger than 90 sq m and at 1 per cent for those smaller than that size, the ministry said in a statement on its website.
Homeowners who live in cities other than the four first-tier ones - Beijing, Shanghai, Guangzhou and Shenzhen - will also be exempt from paying a business tax on properties sold after two years of purchase. The new rules will be effective from today.
In reducing the taxes, China took another step to prop up home sales as it seeks to dissolve a glut of unsold homes. The area of unsold new homes nationwide increased 12 per cent from a year earlier to 441 million sq m as of Nov 30, according to the latest available data from the statistics bureau.
The tax cuts will mostly benefit buyers of "non-ordinary" apartments, which have different definitions across cities but typically refer to apartments larger than 144 sq m with prices above the reach of many buyers, according to Shanghai-based research director Liu Yuan of Centaline Group, China's biggest property agency. Such apartments are currently subject to as much as 3 per cent of deed tax.
The deed tax will be cut to 2 per cent for second homes bigger than 90 sq m and 1 per cent for smaller residences, according to the statement. The eased tax requirements for second homes will exclude buyers in the four first-tier cities.
The easing of real estate measures underlines Beijing's resolution to stabilise a slowing economy, Beijing-based China International Capital Corp analyst Ning Jingbian wrote in a note after the statement.
Policies in the first-tier cities, whose home prices jumped most quickly, remained largely unchanged, he said.
REUTERS, BLOOMBERG
