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Hikes in Chinese urban house prices are again touching a nerve among the public as the faster-than-expected price growth heightens expectations for new control measures, the China Securities Journal reported on Wednesday.
The report cited analysts as saying that the fourth quarter of 2013 is likely to be a window of opportunity in which major cities could roll out intensive measures to refine their property control. Meanwhile, the central government could also introduce new control measures.
Of 70 cities covered by an official survey, only Wenzhou saw year-on-year decline in new home prices, and only two cities -- Wenzhou and Haikou -- saw falls in existing home prices, according to government data released on Tuesday.
Meanwhile, new home prices in first-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen in particular, soared over 20 percent year on year.
Zhang Dawei, director of Centaline Property's research center, said that the property market is polarized as the company's data showed major cities were leading the current price surge with a month-on-month increase of 1.4 percent, followed by a 0.7-percent rise in second-tier cities and a 0.6-percent rise in third-tier cities.
Increasing home demand and the shortage of land supplies in major cities have more noticeably pushed up prices compared to smaller cities, where land supplies have been increased, according to the report.
Qin Hong, an official with the Ministry of Housing and Urban-Rural Development, said that actual living demand, instead of speculative investment, has become the major driver of the price rebound.
Qin added that a raft of reasons, including limited investment channels, unbalanced urban development across different regions, weak social management and over-reliance on land supplies for fiscal income has led to the price rises.
Government measures currently in place, such as restrictions on multiple home purchase, higher down payments for purchases of a second home, and tentative trials of a property tax in Shanghai and Chongqing, have seemingly failed to hold back the runaway prices.
In light of this, Zhang predicted the continuing price hikes this year might accelerate the launch of longer-term control mechanisms, one of which is expanding property tax trials as a way to balance market demand and supply.
Despite the lack of clarity on exactly what kind of policy will be initiated, measures currently in place are likely to remain in effect and even be upgraded, according to analysts. Zhang said the market is looking to policy changes that will be introduced in the Third Plenary Session of the 18th Communist Party of China Central Committee to be held in November.
Hu Jinghui, vice president of bacic5i5j.com, a leading real estate intermediary service company in China, predicted the property tax trials might be expanded to more cities, and the tax levels may be upgraded to target owners of multiple existing homes.
Strictly speaking, a property tax levies taxes for home owners on an annual basis based on the market prices of the properties, the effects of which could reduce the imbalances of home occupations, bring more houses to the market, and stabilize local government fiscal income, Qin Hong said.
However, Qin added property tax targeting individuals is still new in China and in a trial period. "A comprehensive and one-off property tax policy is still a difficult policy to implement at the time being," she said.
