Archive for October 2nd, 2010

Saturday, October 2, 2010

Properties: no Reverse Auction Model adopted

Shenzhen issued a supplementary notice for immediate release on Friday (October 1), “for the implementation of the spirit of the State Council’s document concerning control of excessively rising housing prices”, restricting the number of flats permanent resident families can buy to a maximum of two. Non-permanent residents would be entitled to by a maximum of one flat*), provided that they could show documents verifying that they had paid taxes or social insurance fees for more than one year. The notice also stated that the measure was temporary.

The measures announced by the supplementary note seem to go beyond those reported by Associated Press (AP) on Thursday:

The required downpayment for a first home purchases rises to 30 percent, up from 20 percent, while purchases of second homes will require a 50 percent downpayment, up from 40 percent. Loans for purchases of third homes are banned, said the announcement on the government’s website.
In line with many investors’ expectations, the government also said it would introduce a trial property tax in some major cities. Shanghai, Beijing, Shenzhen and Chongqing are expected to be among the cities where the tax will be rolled out first, state media have said.

Although China’s overall economy has entered what many economists are calling a “soft-landing,” with forecasts for roughly 9 percent growth in the last quarter of the year, real estate remains a wild card, writes AP. Some more statistics there ».

According to Xinhua newsagency on Wednesday (apparently republished by stonerain, which is no official website) , quoting Nanfang Ribao), the ministry of land and resources (国土资源部) recently held a discussion where economist Li Yining (厉以宁) reiterated his suggestions of earlier this year for a reverse auction model, in which – contrary to the current system – the sellers would place their bids [i. e. offering landuse rights – JR] – and the seller who quoted the lowest price would be chosen by the buyer.

However, there were also critics of his suggestion, saying that this could lead to developers using shoddy material, that more people than now would be involved in the decision-making process, or that it the reverse auction model could lead to more corruption.

____________

Note
*) I’m translating 住房 (zhu fang) as “flat” here, because most homes I have seen for sale in Shenzhen seem to be flats. However, zhu fang may as well refer to complete houses (housing).

Related
Inflation bad, Contraction worse, March 20, 2010

%d bloggers like this: