Beijing tipped to slap more curbs on property

The central government is expected to announce more austerity measures to cool the property market as home prices in many cities continue to rise, according to a property agent.

Property prices continued to rise to varying degrees after the government launched a campaign to rein in the real estate market in the middle of last year, Centaline China Property Consultants managing director Sherman Lai Ming-kai said.

'The rising trend will continue in some cities such as Beijing and in Shenzhen and other second-tier cities this year,' said Mr Lai.

New measures to regulate the industry are expected to include tax charges and an increase in land supply.

'It has long been rumoured that the central government will impose a tax on property owners. The tax [will be] similar to the rates in Hong Kong; the more properties you own, the more tax you have to pay,' he said.

In June, measures to deter speculative investment in high-end property and to rein in rapid price rises included higher mortgage rates and downpayments. The government also increased capital gain taxes on property and issued guidelines on buying by foreigners.

According to Centaline China, average prices in 12 cities rose in a range from 2.2 per cent to 18.2 per cent during the year.

Home prices in Ningbo rose at the top of the range, while in Beijing they gained 11.4 per cent and in Shenzhen 8.2 per cent.

Mr Lai predicted prices of mass housing and luxury homes in Beijing would rise 15 per cent this year on strong demand due to growing affluence in the city and nearby provinces.

The biggest growth would be seen in the Bohai Bay region, including Tianjin and Dalian, as the government aimed to speed up economic development in these cities, the property agent said.

In Shenzhen, prices for mass housing and upmarket homes would rise by between 10 and 15 per cent.

The austerity measures had had an impact in some cities such as Hangzhou and Shanghai, Mr Lai said.

'The average price in Hangzhou rose 16.3 per cent compared with 2005, according to Centaline's statistics. But this is because more luxury homes at higher unit prices were offered for sale last year. In general, prices in the city did not rise,' he said. The situation was the same in Shanghai.

Mr Lai forecast that mass-housing prices in Shanghai would drop 5 per cent and prices of upmarket homes would stand still.