CASS calls for subsidies, tax deductions for buyers
A severe imbalance exists in China's real estate market with a combination of a shortage of houses in first-tier cities and oversupply in smaller cities given the current economic environment, the Xinhua News Agency reported Thursday, citing a housing market report released by the Chinese Academy of Social Sciences (CASS).
An imbalance between supply and demand in first-tier cities exists because of high housing prices while apartments in third- and fourth-tier cities are in periodic oversupply due to large inventories and dropping prices.
The decline in commercial housing prices narrowed in October 2014 but increased again from March this year, according to the Xinhua report.
Commercial housing supply slowed down and the growth of inventory dropped in that period, the report said.
The inventory of commercial housing has so far reached 2.1 billion square meters, including 100 million square meters of completed apartments and 1.99 billion square meters of housing under construction.
The domestic property market should be in line with the economic development mode, the report said, which also noted that policies should be rolled out to apply mortgage interest payments as a deduction against individual income taxes in a bid to lower repayment pressure.
Buyers who purchase their first commercial housing unit should be offered housing subsidies and interest subsidies, the report said.
The central government has taken many steps to support the property market since the fourth quarter of 2014. For example, curbs on purchases were abolished except in first-tier cities such as Beijing.
However, imbalances in the supply of capital from domestic financial institutions have caused a combination of rising property prices and a declining investment growth rate, the report said.
Property markets in smaller cities with large inventories are still under severe pressure.
Premier Li Keqiang told a State Council meeting on November 11 that the government should overhaul China's household registration system (hukou) with the aim of encouraging more rural residents to settle in cities to boost consumption of homes and electronic appliances.
