China gearing up for property tax measures in Oct

China may announce property tax measures as early as the October National Day holidays to cool home prices, China Business News reported on Sep 21.

The new tax, which will apply to residential and commercial property, had been expected for next year but now officials are indicating it could come earlier. The government currently imposes a tariff on business-use real estate and exempts individuals' residential housing. The National Day holidays take place from Oct. 1 to Oct. 7.

It is due to concern about rising property prices which increased by 9.3% in 70 major cities in August despite a rash of cooling measures aimed at stamping out speculation and restricting the number of properties that can be owned.

According to Zhu Zhongyi, vice chairman of the China Real Estate Association, developers should be pricing homes more reasonably and if they don't they should face tougher tightening measures.

Property prices in urban China are "too high" and "difficult to accept," according to a third-quarter survey of urban households by the People's Bank of
China released Sept. 19. The percentage of urban households that expect further house- price gains rose 7.2 percentage points from the second quarter to 36.6
percent, the report said.

An index of Chinese property stocks rose 0.3 percent as of 10:34 a.m. local time and is down 30 percent this year. China Vanke Co., the nation's biggest listed developer, gained 1.7 percent to 8.21 yuan in Shenzhen trading, trimming this year's loss to 24 percent.

Sales Recover
China has since April raised the down payment and interest rates on second-home mortgages and restricted the number of new homes residents can buy in some
cities to avert a property bubble. A recovery in property transactions even as price gains slow suggests policy makers will probably introduce further tightening measures, Credit Suisse Group AG analysts Jinsong Du and Ronney Cheung said earlier this month. Sales by value last month rose about 15 percent from July.

By contrast, Jing Ulrich, chairwoman of China equities and commodities at JPMorgan Chase & Co., said Sept. 8 that China doesn't need additional measures
because an increasing supply of affordable housing will damp prices.

BNP Paribas yesterday raised its view on the Chinese property industry to "positive" from "neutral," saying in a report that the government will probably
not introduce further measures to curb the real estate market as they focus on implementing existing policies.