Building a better home market, one step at a time

On March 1, the State Council, China's cabinet, announced a new batch of curbing policies for the country's housing market as property prices remain stubbornly resilient. Included in this latest raft was a controversial 20 percent tax on profits from second-hand home sales.

Although specific details or a time frame for implementation have yet to be revealed, this levy has sent shock waves across the country and sparked no shortage of debate among experts and home buyers alike, with many wondering whether this latest move will succeed in making home prices more affordable or is just a symbolic gesture to show that the country's incoming political leadership is resolute on cooling the market.

Right now it seems that each passing hour brings with it fresh news and opinions on this tax. For example, Monday saw Qi Ji, deputy minister of Housing and Urban-Rural Development, say that the government is expected to roll out supportive rules for this levy to protect the interests of real home buyers.

The deputy minister's comments came in response to widespread concerns that the resale tax would either not do enough to drive investors out of China's housing market or else freeze second-hand home sales while forcing buyers into the new property market. Indeed, hot investment money has long been blamed for inflating prices in the country's home market and many fear that speculators will try to transfer their new expense onto buyers once the new tax kicks in.

With so many unanswered questions still swirling around this much-discussed tax, many buyers and market watchers fear the worst may be yet to come for the property market.

In reality though, the situation may be far less dire than popular opinion may suggest and taking a long-term view of China's still-immature property market is probably the best medicine right now for anxious buyers.

Over the past three years, the public and the market have received almost no official indication whatsoever that curbs on the real estate market would be eased. Moreover, rumors have been circulating for months that some new form of property tax was in the works. All of this is meant to say that the arrival of this new tax should not come as a surprise.

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