Mainland sales off to weak start as tax rule takes effect
The mainland property market got off to a poor start for the New Year, with a sharp fall in the volume of property deals reported as 2009 ended and 2010 got under way.
The Beijing Property Transactions Centre website reported that 30 units changed hands on the secondary market in the city on the first two days of the New Year - down from 48 transactions recorded a year earlier, even though the market was hit last year by the introduction of cooling measures.
Compared with deals done in the same period in 2007, sales on the first two days of 2009 were 67.7 per cent lower.
In Guangzhou, official data showed a total of 247 residential flats were sold on December 30 and 31 last year, 40 per cent fewer than in the same period in 2008.
Calvin Lau Chi-chung, district director at Midland Realty in Guangzhou, said that compared with volumes recorded in early December, deals completed by his firm had dropped by 15 to 20 per cent as the month drew to a close.
Data released by the Shenzhen government showed that 93 and 99 deals were done in the city's primary market on January 1 and 2 respectively, at average prices of 23,061 yuan (HK$26,202) per square metre and 23,696 yuan per square metre.
The two-day New Year total of 192 was 43 per cent fewer than the 335 deals done on the same two days at the beginning of last year. No deals were recorded in Lo Wu district, the city centre of Shenzhen, in the first two days of the New Year.
Lau said the sharp fall in property sales was due to the reinstatement of a tax rule, effective from January 1. From this date, buyers once again have to pay a 5.5 per cent business tax if they resell their properties within five years, ending a relaxation of the lock-up period to two years.
'Many potential buyers had rushed to buy property in November and early December last year, as they worried the government might announce more measures to cool down the booming property market,' said Lau.
Bad weather was another factor dampening deal volumes in Beijing as the New Year got under way, said Dickson Wong Hung, a deputy general manager at Centaline (China) in Beijing.
He expected property sales to rebound in late January and return to normal levels in March.
