26 February, 2011

Solving housing affordability - Chinese style

Isn't it amazing?!!
China is known for radical solving major political and economical issues. Overpopulation was resolved once and forever with one child policy. Now they found a fix for the housing affordability. Imagine this getting through our parliament!!!

"Pushed by fears of the inflationary effects of rapidly escalating property prices and the social effects of the decreasing affordability in major Chinese cities, the Chinese government has introduced tough new rules.

Announced on 27 January 2011, strict new property rules now apply to residential property investments in China, which will undoubtedly have a significant impact on Chinese property investors. These include:

  • Buyers of second homes will require a 60% deposit.

  • Ban on families purchasing a third home.

  • Allowed to purchase only one home outside their registered home city.

  • Stamp duty on full home sale value if sold within five years.

  • Stamp duty up to a maximum of 16% if sold within one year.
Changes to town planning rules will also have an effect, with up to 70% of all land for new housing development being for affordable or social housing.

These new rules are likely to have a significant impact, and in particular, the setting of home selling price targets with heavy financial penalties if values go beyond the targets set. As a result of these changes, we anticipate that Chinese buyers may reconsider their local property purchases and evaluate alternative investments elsewhere.

More Chinese buyers downunder are on their way."
Michael Matusik (property analyst) www.matusik.com.au

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