CHINA will not initiate immediate moves to further curb property speculation because of signs of market stability, says the Hong Kong Association for the Advancement of Real Estate and Construction Technology. The pledge was made by senior officials of the Ministry of Construction last week when association representatives visited Beijing where they were received by Construction Minister Hou Jie. The ministry's main concern was to establish comprehensive co-ordination for the sector within the framework of the economic development. Association chairman Francis Lau Shiu-kwan said: 'The Chinese officials feel that after two years of macroeconomic controls on the real estate market, the market is now undergoing a reasonable level of control. 'They said there would be no more new strategies or measures to curb speculation.' Since July 1993, central authorities had introduced measures to curb property speculation, the most controversial being the real property gains tax. Under the law, gains on property transactions are taxed at between 30 and 60 per cent, the lower rate applying to gains of 50 per cent. Tax regulation details included a five-year exemption period for transactions entered into before January last year, which would apply to the first transfer. Consequently, the growth in the real estate sector on the mainland had dropped from a peak rate of 117 per cent in 1992 to 41 per cent last year. This year's growth is estimated to be between 30 and 35 per cent because Beijing supports construction of 'comfortable housing' - low-cost housing aimed at resolving mass housing shortages. Some provincial governments had recovered land from developers who did not start construction and are short of funds because of Beijing's credit tightening. The association suggested to Chinese officials that individual investors be allowed tax exemptions. Mr Lau said: 'We believe that a stable property market requires investments even from individual investors and we have expressed our opinion to them. 'It is now time that the law should be revised and exemption included for long-term investors. 'Otherwise, all investors will sell their properties at gains of 40 per cent in order to pay the lowest tax rate.' Mr Lau said Mr Hou agreed with the view on revising the law and they had received a guarantee that the tax would not be enforced in Hong Kong after 1997. The representatives also met the Hong Kong and Macau Affairs Office deputy director Chen Ziying. Mr Lau said they urged the office to consider extending land leases in the territory to a 75-year term after 1997. He said the matter was urgent because land sales contributed the bulk of government revenue.
