Developers rally on talk of delay in expanding property tax
Mainland property stocks have been buoyed by a senior tax official's comment published yesterday that the nation is likely to postpone the expansion of its trial property tax to more cities.
Wang Kang, the chief accountant of the State Administration of Taxation, said "property taxes impact the national economy and people's livelihood and an expansion needs to be discussed more widely", according to Xinhua, which quoted a report in the Economic Information Daily yesterday.
The senior tax official said Beijing was actively studying the plan of expanding the property tax pilot scheme, which has been in place in Shanghai and Chongqing since early 2011, to other cities.
The news of a possible delay boosted stocks of property companies yesterday, with shares in Powerlong Real Estate soaring 11.05 per cent to close at HK$2.11. Greentown China rose 7.46 per cent to HK$16.72.
Other developers' shares had a more modest increase. China Overseas Land & Investment rose 2.85 per cent to HK$25.30 while Evergrande Real Estate climbed 2.52 per cent to HK$4.48 and Shimao Property jumped 2.53 per cent to HK$17.02.
"I think the market has over-reacted or over-analysed [the comment]," said Du Jinsong, a property analyst at Credit Suisse. "This is because government officials said earlier that it was difficult to implement the pilot programme nationwide. Therefore, it's not totally new."
Du said the comment had boosted market confidence that the trial scheme might be postponed.
He said property tax would be broadened over the long term, but in the short run, it was a tool for the government to warn the market if prices surged too quickly.
"If property prices soar rapidly in the near future, the government will speed up the expansion of the tax scheme," he said.
Shanghai and Chongqing became the first two cities to impose a property tax in February last year, part of Beijing's efforts to curb the red-hot market.
According to data from the National Bureau of Statistics, 53 of the 70 mainland cities surveyed in November showed month-on-month price increases in new homes, compared with 35 cities in October and 31 in September. November's figure was the highest in 18 months.