Wednesday, March 10, 2010
Addressing the annual National People’s Congress in Beijing, Chinese Premier Wen Jiabao said that the government will continue its u-turn on supportive fiscal policy introduced for the housing market last year. Chinese authorities consider it necessary to cool the market to prevent a real estate bubble after house prices rose 10.7% year-on-year in 2009.
Fuelled by favourable tax breaks and the greater availability of credit, China’s residential property market underwent a boom last year. The government has been forced to cautiously backpeddle on its proposals to allay the rumoured prospect of a real estate bubble. Wen indicated that further tweaking of fiscal and monetary policy might be necessary to cool the market, following positive steps taken in January.
"We will rein in speculative housing purchases by intensifying the implementation of differentiated credit and tax policies," Wen was quoted by China Daily as saying. "It is the government's responsibility to guide the property market. I am confident that the government will ensure the healthy development of the property market," he said.
In January 2010, the government reduced the flow of credit to the sector and introduced taxes on real estate transactions such as the reintroduction of a sales tax on properties sold within five years.