China has completed a comprehensive, nationally unified real estate registry, Minister of Natural Resources Wang Guanghua announced, marking a major breakthrough in the country's decade-long effort to establish a unified property registration system. The move could have profound implications for the real estate market as well as the broader Chinese economy, laying a solid foundation for property sector development, as it would offer regulators a full, clear picture of real estate ownership and enable them to make better policy adjustments, analysts said. The move could also pave the way for a widely discussed property tax, though it does not automatically mean such a tax is imminent. Wang made the announcement during a national meeting on the registration of natural resources and immovable properties, which means that after 10 years of hard work, a unified registry covering all sites and all properties has been fully established, the Xinhua News Agency reported.
In March 2013, China decided to establish a unified property registry by consolidating various registrations at multiple government agencies. “The move marks an important institutional breakthrough in the real estate industry,” Yan Yuejin, Research Director at Shanghai-based E-house China R&D Institute, said in a note. Yan said that the move is conducive to gain a deep understanding of the real estate market, as it addresses long-standing issues such as scattered registrations across the country. The move is conducive to the sound and sustainable development of the country's vast real estate sector, as it helps close loopholes in the registration process that could be exploited by some for making profits, analysts noted.
“From the perspective of overall economic development, the era when people used to speculate in real estate to obtain huge profits is basically over,” Beijing-based Economist Tian Yun told the Global Times. He added that the unified registration system will offer central authorities a clearer picture of the overall real estate market, including the trends. Hu Qimu, Deputy Secretary General of the digital real economies integration Forum 50, said that the move will help ensure the stable operation of the real estate market and support China's efforts to prevent systemic risks.
Another specific and yet sweeping change that could be brought about by the unified registration system could be the implementation of a property tax, which has been under discussion for many years. “I think the property tax might be introduced soon, as the unified registration system indicates that some preparatory work is now completed," Hu said, noting that the country has been laying the groundwork for the property tax for many years, including collecting information. China has been carrying out trials of property tax reforms in some areas, after the Standing Committee of the National People's Congress (NPC) in October 2021 authorized the State Council to pilot property tax reforms in selected regions. While the unified registry could help the implementation of a potential property tax, the move has much broader goals, and its establishment cannot be simply understood as the collection of a property tax, Yan said, as reported by the Global Times.
The South China Morning Post adds that if a property tax is introduced, it could alleviate the debt pressure on local governments and narrow the wealth gap. In the past 10 years, China’s Ministry of Natural Resources has issued more than 790 million real estate certificates. A property tax would increase the costs of keeping an empty house or apartment for investment purposes. President Xi Jinping has emphasized since 2016 that “houses are for living in, not for speculation”.
The real estate registry would help tax bureaus assess how many apartments a family owns and decide how property tax should be collected. The property tax could help address trillions of yuan worth of local government debt, which local-level authorities have struggled to pay off in the face of falling land sales and smaller tax revenues amid China’s economic slowdown. Speaking at a symposium held by the East Asian Institute of the National University of Singapore in January, former Finance Minister Lou Jiwei said a property tax would be the most suitable for the local tax system. “Its pilot should be expanded as soon as the economy recovers,” he said. Housing accounts for 59.1% of Chinese households’ assets, according to a survey by China’s central bank in early 2020. The proportion is about 28.5 percentage points higher than it is for U.S. families. China has imposed property taxes in Shanghai and Chongqing since 2011, but the tax sizes were fairly small because only high-priced homes were targeted as part of the pilot programs. The property market hasn’t returned to positive growth, as investment in the first quarter dropped by 5.8% from a year earlier, and the amount of sold floor space fell by 1.8%.
