Recent measures introduced by the Chinese government to halt rapidly rising house prices in the country would appear to be failing, according to recent figures.
Earlier this year, the Chinese Government implemented a 20 per cent capital gains tax on home sale profits and asked cities where property prices are rising ‘significantly’ to raise the down payment requirement and mortgage rates on second homes.
Yet house price data from July shows that property prices rose in 69 of the 70 cities tracked by the government. Overall, prices rose an average 6.7 per cent year-over-year in July, up from 6.1 per cent in June, with house values in the major cities of Shanghai and Beijing over 14 per cent higher than they were a year ago.
For the third month in a row, the eastern city of Wenzhou was the only tracked city to post a decline.
It would now appear that rather than introduce more curbs to stem the rising prices, the government will instead look to increase the supply of houses being built – many economists view a lack of affordable houses compared to the demand as being the main reason for the increasing prices.
“It’s unlikely that the government will issue nationwide curbs or ease policies,” said Ding Shuang, a senior China economist at Citigroup Inc, over the weekend. “The government will likely to aim at long-term policies by increasing more supply.”