Chinese people expect more "affordable houses"

   Date:2007/01/23

A revived capital gains tax imposed on Chinese real estate developers has brought hope to many Chinese citizens who can not afford to buy an apartment. China announced the enforcement of a land appreciation tax of 30 to 60 percent on net gains made from all property development deals. With the new rules, real estate developers' juicy profits will be cut in half.

According to the regulation, the government will collect the tax as soon as development projects are finished or transferred. But it did not elaborate how the tax revenue would be spent. Housing prices have been rocketing in Chinese cities over the last couple of years. Thursday's figures from the National Bureau of Statistics showed that the price of newly-built apartments in Beijing rose 10.4 percent year-on-year last December.

New apartments within Beijing's fifth ring road have all seen their prices exceed 10,000 yuan (1,200 U.S. dollars) per square meter. For young college graduates in Chinese cities, buying an apartment near their offices has become a mission impossible. The government finances a few real estate projects and sells these "affordable houses" to young people every year. But compared with the huge demand, they are far from enough.

Official statistics showed that China's total tax revenues reached a record high of 3.8 trillion yuan (480 billion U.S. dollars) in 2006, an increase of 22 percent year-on-year. Moreover, the country's foreign exchange reserve exceeded one trillion U.S. dollars at the end of 2006, up 30.22 percent over that at the end of 2005.


 

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