The Chinese real estate market continues to be sluggish, with the Communist authorities continuously introducing various policies to boost the market, but with little success. On Friday (September 20th), Beijing mentioned for the first time that the standards for ordinary and non-ordinary residential properties, which have been in effect for ten years, will be timely canceled, sparking discussions.
September 20th, the implementation opinions of the “Decision of the CPC Central Committee on Further Comprehensive Deepening of Reform and Advancing China’s Modernization” released by the CPC Beijing Municipal Committee mentioned optimizing real estate policies and timely canceling the standards for ordinary and non-ordinary residential properties.
This is the first time that Beijing has mentioned canceling the standards for ordinary and non-ordinary residential properties.
Zhang Dawei, chief analyst at Centaline Property, stated that there are differences in transaction taxes and fees between ordinary and non-ordinary residential properties in Beijing, such as “deed tax and value-added tax.” The deed tax for the first set of ordinary residential properties is 1%-1.5%, while the tax rate for the first set of non-ordinary residential properties is uniformly 1.5%. For properties with property certificates held for over two years, ordinary residential properties are exempt from value-added tax, while non-ordinary residential properties are subject to value-added tax based on the difference, with a tax rate of 5.3%.
Zhang Dawei mentioned that since September 30, 2023, Beijing’s property market has introduced nine different adjustments to policies of varying intensities. The recent policy impacts have gradually weakened, and releasing signals of policy adjustments at this time aligns with market expectations.
However, the market is not optimistic.
Professional investors, financial bloggers, and popular Weibo influencer “Flying Brother – Feige” said: “We can’t just squeeze the toothpaste now; we need to introduce large-scale radical policies; otherwise, there will be no effect!”
Financial blogger and Weibo influencer “Enjoying the Spring” said: “Implement it nationwide altogether, but when canceling, it’s always one by one, lacking momentum; why not cancel nationwide simultaneously? The stock market is also like this, constantly patching up without any effect.”
Financial blogger and Weibo influencer “Zhou Si CIO” said: “Still hesitating, even if everything is completely opened up, the real estate sector is already past its prime. Those who were supposed to buy have already done so. With a steep decline in population, there will be a large number of houses coming onto the market after the passing of the post-1950s and post-1960s generations. Just look at the trends of the shares of the top real estate companies, and it will be clear.”
In 2014, Beijing established the so-called standards for identifying ordinary residential properties, which were adjusted last December after nine years of implementation.
In 2014, the standard for identifying ordinary residential properties included having a building plot ratio of 1.0 or above in residential communities; an individual unit building area of 140 square meters or less; and an actual transaction price lower than the specified price standard. Within the 5th Ring Road, the unit price was below 39,600 yuan per square meter or a total price below 4.68 million yuan, between the 5th and 6th Ring Roads, the unit price was below 31,680 yuan per square meter or a total price below 3.744 million yuan, and outside the 6th Ring Road, the unit price was below 23,760 yuan per square meter or a total price below 2.808 million yuan.
After the adjustment in December 2023, the standard for identifying ordinary residential properties included having a building plot ratio of 1.0 or above in residential communities; an individual unit housing area of 144 square meters or less; with housing transaction prices below 85,000 yuan per square meter within the 5th Ring Road, below 65,000 yuan per square meter between the 5th and 6th Ring Roads, and below 45,000 yuan per square meter outside the 6th Ring Road.