Cooling measures cut China home sales
Despite Beijing recording 88 per cent plunge in April deals, prices remain steady as many cities have yet to strictly enforce tax on capital gains
Mainland home sales plunged last month after local governments fell in line with control measures demanded by Beijing.
But agents and analysts said the impact of the measures was less severe than they had expected, and prices had held firm because some local authorities had not strictly enforced a 20 per cent capital gains tax ordered by the central government.
They said sales would improve next month and prices would continue to rise but at a slower pace.
In February, Beijing announced five measures aimed at cooling the property market, including strict checks on mortgage qualifications for those buying second homes and enforcing a capital gains levy of 20 per cent on sellers that was first announced in 1994.
The central government told local governments to work out schedules for the implementation of the tax before the end of March.
By then, 26 key cities had announced details of how they would implement the five policy measures, according to a BNP Paribas report. By May 2, the number of cities had increased to 35, Xinhua reported.
In reaction to the measures, sales of second-hand homes in Beijing last month fell 88.1 per cent from March to 5,212 units, the lowest in 15 months, according to Centaline Property Agency. In Shenzhen, sales were down 30 to 40 per cent to about 6,000 units, following a surge to about 10,000 in March from a monthly average of 5,000 to 6,000 as homebuyers rushed to complete deals before the implementation of the tax, according to Andy Lee Yiu-chi, the chief executive for southern China at Centaline.