The Chinese government won’t introduce a property tax this year, despite claims from academics, politicians and economists that it would help curtail the country’s soaring home prices.
The annual National People’s Congress, held this month, did not feature a discussion of the topic, the Wall Street Journal reported. A NPC spokesperson said a property tax will not make it onto the legislative agenda at all in 2017.
There have been concerns for months that China’s property market is overheated, and some economists have expressed concern the Chinese government is not moving fast to deal with the problem.
Last month, home prices in the country were up nearly 11 percent year-over-year, the newspaper reported, citing official data released over the weekend. In some cities, home prices surged 30 percent in the last year, according to the newspaper.
In September, Wang Jianlin, CEO of Dalian Wanda Group, warned that China’s market is now facing “the biggest bubble in history.”
The country’s vice housing minister, Lu Kehua, last month said the government should act quickly on introducing a property tax. However, with a Communist Party leadership transition due to take place this year, the government is nervous about making any changes that have major implications for the economy.
“The rich, the powerful and other interest groups… opposed the idea because they own better and large homes, and will have to pay more tax,” Yilin Hou, a Syracuse University professor who studies potential tax impacts on China, told the Wall Street Journal.
Meanwhile, the Chinese government is stepping up its efforts to stop locals from buying real estate abroad. Some are skeptical about whether that will have any real impact on the way Chinese nationals invest. But New York City brokers last month told The Real Deal Chinese buyers are moving away from ultra-pricey pads and focusing on value-oriented deals. [WSJ] — Miriam Hall