Chinese property developers’ shares fell yesterday on worries about the impact of new government measures to control house prices announced last week.
Homeowners who sell their properties will have to pay a capital gains tax of 20 percent on their profits, the Chinese State Council said in a statement on Friday.
China previously taxed homeowners 1 to 2 percent of the sale price.
The government also ordered the central bank to raise down payments and mortgage lending rates for buyers of second homes in some cities, and told local governments to limit non-residents from buying more than one home.
In early 2011, the State Council set the minimum down payment for second homes at 60 percent of the purchase price as part of earlier efforts to control property prices.
Property prices are a sensitive issue in China and authorities have sought to control them over the past three years, with measures including restrictions on second and third home purchases, higher minimum down payments and taxes in some cities on multiple and non-locally-owned homes.
The CSI 300, representing the nation’s biggest companies on the Shanghai and Shenzhen stock exchanges, fell 4.6 percent to 2,545.72 at the close, the most since November 2010, while the Shanghai Composite Index slid 3.7 percent to 2,273.40, the most since August 2011.
China Vanke Co (萬科), the nation’s largest property developer, led a gauge of real-estate companies to the steepest tumble since June 2008.
Analysts said the new measures may dampen sentiment toward the sector in the short term, but home prices could rise in the long run.
“Such policies will always have a temporary, noisy and negative impact,” said Liu Ligang (劉利剛), an economist for Australia and New Zealand Banking Group in Hong Kong.
“However, they will not have much lasting impact ... long-term demand will not suddenly disappear,” he said in a research note, citing China’s continuing urbanization.
It was not clear when the new tax will come into force, but homeowners rushed to sell properties ahead of its implementation.
The number of units listed for sale at one Beijing estate agency surged by nearly 40 percent one day after the announcement, the Economic Information Daily newspaper said yesterday.
Lu Ting (陸挺), a Hong Kong-based economist at Bank of America Merrill Lynch, said the crackdown on the secondary market could shift demand to new homes.