Policies expected to bolster real estate

By Cao Qian  |   2009-1-21  |     NEWSPAPER EDITION

THE central government will probably set out favorable policies for home buyers and developers over the coming year to bolster the country's real estate industry which went through a bumpy ride in 2008, industry experts predicted.

"In addition to preferential loan policies as well as tax and fee cuts, more initiatives will be launched to boost home sales," said David Ji, head of research for north Asia operation at DTZ, a leading real estate service provider. "This may include individual income tax rebates for home buyers as well as the relaxation on the 70/90 policy for developers."

"Allowing home buyers to have part or the full amount of their individual income tax refunded for home purchases is a very useful method to spur buying as it reduces costs," Yin Kunhua, a retired professor at Shanghai University of Finance and Economics, told a recent industry seminar. "The government should reintroduce these initiatives."

In May 2006, the Ministry of Construction (now renamed as the Ministry of Housing and Urban-Rural Development), announced that the combined GFA (gross floor area) of all residential units below 90 square meters in size should account for more than 70 percent of the total GFA of a project, a move designed to raise the supply of small to mid-sized homes.

And the tax rebate policy, implemented in Shanghai in 1998 to encourage people to purchase houses after the abolishment of welfare housing system, allowed people who bought their homes between June 1998 and May 2003 to get back part or the full amount of their individual income tax levied during the period after their home purchase.