Special report: China moves to curb soaring house prices

    BEIJING, June 7 -- Starting June 7, the local tax authority in Shenzhen begins to collect a 5 percent business tax on all houses sold within five years of purchase, following a Central Government regulation introduced to counter soaring prices in the property market.

    The number of visitors to the city's property transaction centers rose sharply yesterday, with property sellers trying to meet the deadline for the tax break.

    "The number of applications we received today doubled that of an average day," said a worker with the Futian property transaction center surnamed Han.

    Han experienced a similar rush of applications last June, when the government started to levy a business tax on the houses that were sold within two years of purchase. Previously the government had only collected business tax on houses sold within one year of purchase.

    "The tax policies have been changing, but the price of houses continued to rise," said Han.

    The business tax seems to have had some effects. Liang Wenhua, general manager with Shihua Real Estate, said yesterday the number of second-hand house transactions dropped 24 percent in Shenzhen at the end of May from the beginning of the same month.

    However, it's unclear if the business tax will influence property prices. "Shenzheners are rational. If we say the housing prices would have a big change merely because of the new tax policy, we are frightening ourselves," said Xiao Yong, general manager with Shunchi Real Estate.

    Last year's tax policy brought the number of transactions down for a period of three months, but after that the housing prices rose sharply from September to November, said Kuang Leli, vice general manager of Shenzhen Merchants Property Consultant Co.

(Source: Shenzhen Daily)