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After a series of measures designed to slow down China's soaring housing prices, seven government departments took further action Wednesday, issuing proposals for stabilizing housing prices.
The proposals were jointly issued by the Ministry of Construction, the State Development and Reform Commission, the Ministry of Finance, the Ministry of Land and Resources, , State Administration of Taxation and China Banking Regulatory Commission.
Targeting problems such as too much investment in real estate and hiking housing price, the proposals suggest all regions in the country undertake the cooling of the real estate market as a priority.
China's average housing price rose by 14.4 percent in 2004. In the first quarter of 2005, housing prices rose by 12.5 percent year on year.
In east China's Shanghai Municipality, which has one of the most shocking housing prices in China, the average price of housing in urban and suburban regions has exceeded 10,000 yuan (US$1207.7) per square meter.
Experts say improper supply structures of commercial housing and disordered markets contribute to the rising prices.
Zheng Jingping, spokesman of the National Bureau of Statistics, said recently that the proportion of affordable houses had reduced from 6.1 percent in 2003 to 4.6 percent in 2004.
To ensure an effective supply of medium and small-sized houses at middle and low price levels, the proposals demand that local real estate administrative departments make clear requirements on price level and housing sizes before giving permission to land use.
The proposals stress reducing construction costs for affordable housing and restricting developers' profits to three percent.
The proposals also limit land speculation. Owners of land undeveloped one year after the date of purchase will be charged a land idling fee. For those still undeveloped two years later, the right to develop it will be revoked.
Experts say that this policy will be helpful in cracking down on land "hoarding." As a result of soaring housing price since last year, many enterprises or units owning land are waiting for further price increases to develop the land.
As of June 1, 2005, private houses sold after being inhabited for less than two years must pay business taxes according to the whole sale price.
Ordinary housing lived for two years or more will be free from business taxes while other housing lived for two years or more will be taxed according to the price difference between the sale price and the buying price.
According to the current taxation policy, individuals who buy ordinary housing having been inhabited for over one year will not have to pay business taxes, but they must pay business taxes according to price difference between the sale price and the buying price if the house has been lived in for less than one year.
The adjustment on business taxation will be helpful for cracking down on housing speculation by increasing the trading cost to speculators, experts say.
The proposals also require housing purchases to be made under the buyer's real name and prohibit sales of forward delivery housing whose construction is still not completed.
(Xinhua News Agency May 12, 2005)
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