Property tax set to be extended

China will extend the trial property tax program to more cities this year "at an appropriate pace" and the country will not see a rebound of property prices this year, officials at the Ministry of Housing and Urban-Rural Development (MOHURD) said Sunday.

"We are working with the State Administration of Taxation to draw on the successful experience of the property tax program and will extend it to more cities this year at an appropriate pace," Qi Ji, vice minister at the MOHURD, said yesterday at a forum held at Sun Yat-sen University in Guangdong Province.

The pilot property tax program was launched in Shanghai and Chongqing last year as part of the effort to bring down excessive home price rises.

The ministry has not yet decided on which cities will be the next to be included in the program, said Qi, but there has been speculation in the media that it will be Guangzhou and Shenzhen.

There have also been predictions that the tax may be extended to prominent second-tier cities.

"The property tax program is unlikely to be extended in the first half of the year. First-tier cities where housing markets are more mature such as Guangzhou are expected to be included later this year," Hui Jianqiang, a property researcher at the Shanghai-based E-house China Research and Development Institute, told the Global Times yesterday.

Qin Hong, head of policy research at the MOHURD, said Saturday that choosing which cities will be the next to be included in the program depends on how enthusiastic the local governments will be in implementing the tax.

A substantial rebound of property prices is unlikely to occur this year because the conditions for it do not exist, Qin said at a forum held at Tsinghua University.

"Developers still have a lot of unsold property to sell, so they are unlikely to raise prices. Also, the central government has remained determined to increase the supply of affordable housing this year, whose price won't have big impact on the overall price level," she said.

In February, prices fell month-on-month in 45 cities among the 70 major cities monitored by the government, compared to price drops in 47 of them in January. And four of the 70 cities saw price gains in February, the National Bureau of Statistics said last week.

"Although a few cities reported price increases last month, such fluctuation is acceptable as the increases are getting smaller. So there won't be a big rebound in prices this year," Chen Guoqiang, deputy director of the China Real Estate Society, told the Global Times.