Guangzhou's Tax Reductions Lifting Beijing's Residential Property Transactions

Guangzhou's Tax Reductions and the Impact on Beijing's Housing Market

Chinese authorities are exploring tax reductions related to residential property transactions, with significant implications for major cities like Beijing, Guangzhou, and Shenzhen. The Ministry of Finance has announced plans to implement new policies aimed at easing financial burdens on homebuyers and sellers. Homebuyers may benefit from a potential 2% reduction in deed tax, while sellers could see the removal of the 5% value-added tax on properties sold within two years. Equity analyst Jeff Zhang from Morningstar highlights that such reductions could save buyers up to 200,000 yuan on a 10 million yuan property, bolstering the housing market and encouraging transactions in larger cities.

Details on Proposed Tax Adjustments

• The State Tax Administration is reviewing tax updates in major cities like Beijing, Shanghai, Shenzhen, and Guangzhou.
• Analysts contend that removing the differentiation between standard and non-standard housing will provide further relief to sellers.
• Anticipated timelines for these tax breaks have not yet been disclosed, but positive shifts are expected.

Additionally, the government of Shenzhen is considering increasing the housing provident fund loan limits, aiming to strengthen buying capabilities for individuals and households. This proactive approach reflects a growing sentiment among regional authorities to stimulate housing transactions and drive market growth.

Real Estate Market Resilience

Despite ongoing market challenges, data from China Index Academy indicates second-hand home price declines lessened in October, suggesting a potentially stabilizing market. With the average new home price increase of 0.29% month-on-month, the Chinese housing sector may be on the brink of recovery, aided by these upcoming tax reductions.