This might not be the most exciting news story for some of you, but it is BIG news. China is trying out property taxes in Chongqing and Shanghai in their latest effort to cool down the property markets.
If you look at the article you can see that the property taxes are 1. pretty small (less than 1.5%) and 2. confusing as heck. For example, in Shanghai you get to calculate square footage across all properties and then divide by total family members.
Property prices and China’s housing bubble have been a hot topic for the last year or so. In conversations with my coworkers, one of the first questions they ask is how much housing in the US costs. With good reason too, in Nanjing housing prices increased 400% in some downtown areas just over the past 5 years, and that is typical of what has been going on in most Chinese cities.
In 2009 there was a popular TV show in China that featured a family struggling to save money for a home big enough for all of them. It was forced off the air due to its “sensitive” nature. A friend said that he could relate to the show, since the amount he was able to save each year was less than the cost increase.
So the property tax is big news, as it shows that the gov’t is starting to grasp for new ways to control property speculation, ways it claimed it would NEVER resort to.