China’s new property tax may prompt owners of multiple homes to sell down their holdings before prices take a hit, say analysts

With the new levy bound to undercut house prices, agents said those investors might need to offer steep discounts if they want to sell fast

The proposed property tax is part of a wider ‘common prosperity’ programme to enhance housing affordability and rein in galloping property prices

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The proposed property tax is part of a wider ‘common prosperity’ programme to enhance housing affordability and rein in galloping property prices. Photo: AFP

Published: 4:45pm, 25 Oct 2021Updated: 10:25pm, 25 Oct 2021

News that China is to pilot a much-heralded property tax in selected cities may have a psychological impact on the market, prompting owners of multiple homes to sell down their holdings before the market takes a sizeable hit, according to analysts.

With the new levy bound to undercut house prices across the nation – as it is intended to do – agents said those investors might need to offer steep discounts if they want to sell fast.

“Heavily geared investors will be hardest hit as it will become more difficult for them to sell amid a depressed market,” said Huang To, the general manager for project development at real estate agency Centaline’s Guangzhou unit. He was referring to investors who had borrowed heavily to buy several properties.

In Guangzhou, one of the cities tipped to be involved in a five-year pilot scheme for the tax, prices of lived-in homes have dropped by around 10 per cent in recent months, while sales have fallen 20 per cent in each of the last few months, he said.

“It is hard to find buyers even without the news of the property tax,” said Huang.