China's State Council Monday issued a circular that
aims to increase the supply of affordable housing in a bid to bring
down soaring house prices.
The circular, worked out by the Ministry of Construction, the
National Development and Reform Commission and seven other
departments, says all local governments must list the building of
affordable homes in their 11th Five-year Guidelines.
By the end of September, all municipal authorities must
publishplans on the construction of affordable housing, including
generalhousing stock, government-subsidized housing and
government-owned rental housing for the poor, the circular
says.
From June 1, homes smaller than 90 square meters must account
for at least 70 percent of the total floor space in any new
residential housing projects, it says.
The central government has been trying to rein in soaring
property prices since early 2005, but without success.
Prices in major cities continued to rise in the first four
months of the year, some of them reporting gains of over 10
percent.
The new circular follows the State Council decision on May 18,
in which the government pledged to increase the supply of
affordable homes and take other measures to ensure the healthy
development of the property market.
The circular includes measures against property speculators,
such as imposing the full income tax rate on the sale of homes that
have been owned for less than five years.
Mortgage lenders will be required to demand a down payment of at
least 30 percent.
The down payment rate will remain 20 percent for those who are
buying houses smaller than 90 square meters for their own
accommodation.
Under the circular, all developers will have to fund 35
percentof the investment for the development of any project from
their own capital before they can seek loans from commercial
banks.
Developers shall lose their land if it remains undeveloped for
two years after purchase.
The circular also aims to reduce demand, urging local
authorities to exercise restraint in demolishing old homes, which
is forcing tens of thousands of people on to the market every
year.
The circular threatens to be tough with developers engaging in
hoarding and other malpractice. Serious offenders shall be fined or
even have their licenses revoked, it says.
(Xinhua News Agency May 30, 2006)