Starting November 1, the Chinese regime will temporarily abolish individual stamp tax for people who purchase or sell residential housing and the capital gains tax for those who sell residential housing.
According to the BBC news, the real estate tax rate for first-time buyers of residential housing of less than 90 square meters will be temporarily lowered to 1 percent. In addition, local governments may adopt additional measures to reduce tax burdens on residential home buyers.
The Chinese Ministry of Finance formulated this policy to stimulate the sluggish housing market. After Chinese government officials held a meeting to discuss the problems last Friday, people were not surprised to see the announcement. According to the figures released by Chinese authorities, housing prices dropped 10 percent in 70 major cities for the period between July and August this year.
It was the first time to see a continued falling of housing prices since the Chinese authorities started to compile such statistics in July 2005. Chinese authorities have adopted a series of measures to stimulate the housing market, including lowering its one-year loan interest rate, so as to reduce the impact of the international financial crisis.
Earlier this week, Chinese government authorities said that the economic growth rate dropped to nine percent in the third quarter of this year, showing that the impact of the world financial crisis on China is far more serious than originally expected. The weak housing market may continue to place heavy pressure on China’s economy.
Chinese local governments have taken numerous steps to rescue the housing market, including offering preferential treatments to first-time residential housing buyers and relaxing the requirements for the construction period of housing projects.