With the implementation of the latest package of tax incentives on December 1, home-buying costs have been reduced which has further unlocked housing demand. Many Chinese cities saw a surge in property viewings over the first week of December, leading to continued stabilization of the real estate market. The biggest beneficiaries of the new tax policies are customers who wish to upgrade their housing. Property viewings surged by around 30% over in the first week of December, showing a noticeable uptick, a sales agent surnamed Zhu in Hangzhou, Zhejiang province, told the Global Times. Another agent based in Beijing, who asked to remain anonymous, told the Global Times that “so far in December, both property viewings and transaction volumes have been better than last month. Prices have also seen a rebound, especially for upgraded housing, which has had a notable increase,” the agent said.
“Since the new policy was implemented, we've seen a general month-on-month increase in housing search activities across cities of all tiers. Key indicators in the second-hand housing market are looking optimistic, with a decrease in listing volumes, shorter transaction cycles, and a rise in the price adjustment index for sellers," Wei Xie, Chief Research Officer of 58 Anjuke Institute, told the Global Times. Among a series of policies launched to support the housing market over recent months, the Ministry of Finance, along with the State Taxation Administration (STA) and the Ministry of Housing and Urban-Rural Development, rolled out pro-housing tax policies on November 13, lowering the deed taxes to 1% for purchases of first and second homes under 140 square meters. These tax rates were previously only available for homes under 90 sq m.
Starting from December 1, the deed, value-added, and individual income taxes on first and second home transactions have been reduced to varying degrees. As long as the taxes have not been declared or paid and the property certificates have not been issued, the new rules will apply. From December 1 to 5, a total of 364,000 households declared eligibility for the preferential deed tax policies, resulting in a total reduction of CNY8.4 billion, with an average tax saving of CNY23,000 per household, STA data showed. The policy has further released pent-up housing demand. A total of 553,000 housing transactions were reported nationwide during the five-day period, a 24.8% year-on-year increase. The effect is especially evident in first-tier cities. In Beijing, transactions grew by 62.2%, in Shanghai by 87.2%, in Guangzhou by 27.5% and in Shenzhen by 66.4%, the Global Times reports.
