China announces stimulus policies to boost real estate market

Oct. 23, 2008 (China Knowledge) - China's Ministry of Finance (MOF) Wednesday announced on Wednesday a series of measures to boost the country's ailing real estate market amid global financial turmoil, sources reported.

Effective from Nov. 1, 2008, the contract tax will be reduced to 1% on purchase of the first housing property with a floor space of no more than 90 square meters. Meanwhile, the stamp tax on property purchase and the value-added tax of land on property sales would be lifted, according to the MOF.

Local-level authorities are also allowed to launch new policies to encourage housing consumption, said the MOF, adding that it will expedite the construction of affordable houses and innovation of old houses, as well as to increase the urban subsidized housing to the low-income families.

On the same day, the central bank announced that the floor for interest rates would be cut to 70% of the PBOC's benchmark rate and the down payment for an initial purchase of housing for self use would be lowered to 20% from 30%. Meanwhile, PBOC reduced the interest rates on mortgages by 27 percentage points for first-time home buyers. The new adjustments will be effective on Oct. 27.