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Measures urged for China’s ‘evil housing industry’

SHANGHAI: China's soaring house prices are like an "enemy within", the spokesman for the country's small businesses said, calling for Beijing to intensify its crackdown on the "evil housing industry".

Li Zibin, the chairman of the China Association of Small and Medium Enterprises, said China’s property bubble would undermine the economy unless Beijing and lower-level governments used tougher measures to regulate the overheated market.

"The existing policies have failed to keep a lid on housing price growth," Li, a former deputy chief of the National Development and Reform Commission (NDRC), said at a forum in Yixing, Jiangsu province. "Further measures have to be taken to curb the evil housing industry."

Li's remarks came while authorities seemed to be playing a waiting game, spooked by fears that a collapse of the property market could drag down China's rapid economic growth and cause significant damage to the banking sector.

Speculation has been mounting that the central government will impose a property tax to halt rising prices, but no decision has been made on such a stringent cooling measure.

The NDRC said on May 31 it planned to gradually promote a reform to the real estate tax this year.

Meanwhile, the China Securities Journal said Shanghai's plan to introduce a tax on residential real estate had been submitted to the central government for review.

The city may impose the tax on people without residence permits and those who do not file income tax declarations for three years or more, the report said.

It gave no time frame for introducing the tax.

Beijing issued policies to curb speculation in the housing market earlier this year, raising mortgage rates and increasing minimum down payments to dampen buying interest in apartments. Home prices jumped 12.8% in April from a year earlier, a survey by the National Bureau of Statistics shows. The increase was the largest since the government started the survey of residential prices in 70 cities.

At the Yixing forum, attended by hundreds of government officials, entrepreneurs and economists, Li criticised local governments for being one of the major driving forces for the unbridled growth in the cost of property as they used various tactics to shore up land prices.

In Shanghai, about 100 billon yuan (RM48 billion), or 40% of the government's income, was derived from land auctions last year.

"Local governments hope to collect more money to fund their planned projects," Li said. "Land sales seem the most efficient way to get the cash rolling in."

Shanghai government spokesman Chen Qiwei said last week that detailed policies on curbing the housing market were still in the works.

But another Shanghai government official said the curbs would have little impact on the market, although he declined to give more details.

Shanghai developers have delayed sales of new residences because the municipal government has not yet announced its property policy, the Oriental Morning Post reported, citing unidentified developers.

Only 46 of a scheduled 96 developments were put on sale for the month as of May 28, the newspaper said, citing Soufun.com, a real estate data research website.

Shanghai has spent US$95 billion (RM311.8 billion) on infrastructure for the World Expo, which opened last month and will run to the end of October.

A boom-to-bust cycle in the housing market would deal another heavy blow to the mainland's commercial capital, whose gross domestic product was one of the slowest growing among provincial-level regions last year. – South China Morning Post
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