Chinese cities pressured by home prices need to boost land

cities under pressure from soaring home prices need to boost land supply appropriately while authorities take measures to fight an inventory overhang in smaller cities, Premier Li Keqiang said.

China is looking to keep the property market stable this year after prices of new homes soared 12.4 per cent last year, the most since 2011. Authorities in more than 20 cities have introduced curbs to cool the market since October.

“We need to be clear that housing is for people to live in,” Li said in a work report at the opening of the annual meeting of parliament.

He pledged to establish longterm mechanisms for promoting the steady and sound development of the sector, and take more category-based and targeted measures to regulate the market.

But there were still “differences” in the interpretation of such long-term mechanisms, said Jia Kang, director at the Ministry of Finance’s Institute of Fiscal Science, on the sidelines of the parliament meeting.

Last year, President Xi Jinping said China’s approach to regulating its red-hot property market would include financial, fiscal, tax, land, and regulatory measures.

The government has no plans to implement a nationwide property tax this year, Fu Ying, spokeswoman for China’s parliament, said.

“There was too much resistance from all sides,” Jia said, without elaborating.

The government said last month preparatory work was being done for a nationwide property tax.

China has for years considered an annual property tax, which could deter speculation in real estate, though little progress has been made due to resistance from various quarters, such as local governments, which heavily rely on land sales for revenue.

China will take steps to cut excessive real estate inventory in the third- and fourth-tier cities, Li also said, as the housing market has become increasingly polarised.

Li said the government supported migrant workers in buying urban homes.

To do this, Jia said additional policy support would be needed besides existing policies of making mortgage loans more available to migrant workers, as their ability to pay is quite limited. — Reuters