Chinese govt tightens real estate rules, sparks panic selling
Beijing: Frantic home sellers and buyers swarmed housing registration centres in the Chinese capital to beat further tightening restrictions of house sales including 20 percent tax on capital gains.
In the Fengtai District Housing Registration Hall, people queued in long lines to finalise transactions as police maintained order among hundreds more people waiting outside.
Among the measures, the central government announced a proposed 20 percent tax on capital gains from second-hand home transactions, replacing the previous transaction tax of 1 to 2 percent of the final sale price.
The central government also required governments at the provincial level to work out specific targets and measures before the end of March.
The move triggered a wave of panic among buyers and sellers, with brokers raking in substantial commission fees amid the frenzy.
Wang Xinghua, a consultant with the Xuanwumen outlet of property brokerage firm HomeLink, said the purchasing rush pushed up revenues at his outlet in March to about one million yuan (USD 160,000), roughly double the monthly average.
"The housing market might cool down for a while after the new tax policies are in place. In the long run, however, housing prices will not drop, as rigid demand is still there," Wang said.
The new initiative in the housing market, however, triggered an unintended surge in housing prices, particularly in the second-hand housing market.
"I think the government should have acted in a more transparent way by, say, letting us know when exactly the new tax policies would be implemented. Otherwise, the market would go through severe fluctuations amid a buying or selling panic," state-run Xinhua news agency quoted Li as saying.
A second-hand automobile dealer, Wang, said he commissioned the sale of his house to a property brokerage firm on the same day the new rules were announced.
Assuming prices would fall, Wang sold his home just two days later, before seeing how significantly prices would rise.