Property pre-sale system to curb speculators: report

The Development Research Center of the State Council has published a series of recommendations for the country's property sector, within new findings on China's social and economic development.

Its new report—giving other observations on the country's macro economy, foreign trade, agriculture, public service, urbanization, and the welfare system—has suggested that in future, the country's existing property pre-sale system, widely adopted in transactions of unfinished properties, could be used as a solution to curb speculators.

The report said that gross profit margins for the Chinese real estate market were about 20 percent in 2003, close to most other industries, but the profit rate grew dramatically as properties skyrocketed, hitting 30 percent by 2007, about 10 percentage points higher than the average for the nation's other major industries.

It noted that some well-known domestic developers' gross profits even surpassed 50 percent, much higher than their counterparts in Japan or the US.

Wang Wei, deputy director of the Institute of Market Economy under the Development Research Center, was quoted on Caijing.com as saying the country's ongoing urbanization will gradually narrow those profit margins in future.

In an announcement published on its official website, northwest Shaanxi province's housing department said a reasonable property profit margin should be about 10 percent, the Nanfang Daily reported on Tuesday.

A recent report, also by the Development Research Center, said land transaction fees nationwide surged nearly 20 times in a decade to 2.71 trillion yuan ($433.4 billion) in 2010.