|Rush to avoid taxes.|
Scramble: People rush to register the sale of their home on the last day before China toughens up their existing capital gains tax legislation.
Will the Chinese Real Estate Bubble Burst?
- New 20% tax causes a mad rush of home owners putting their property on the market.
- A bursting real estate bubble could cause massive social and economic unrest.
Hundreds of Chinese homeowners scramble to register the sales of their homes before new capital gains tax rules are introduced in a bid to stop the housing boom spiralling out of control.
The scenes of panic at the Nanjing Municipal Real Estate Trading Centre were repeated across the country with the government giving virtually no warning before a mandatory 20 per cent tax is introduced.
Previously sellers were given the choice of either paying between one and three per cent of the gross transaction value, or a flat 20 per cent capital gains, with most opting for the former reports the UK Daily Mail.
The new rules surrounding capital gains tax are among a raft of new measures designed to quell the housing boom such as implementing existing legislation and ordering municipalities to provide affordable new homes.
China's Ghost Cities
China's socialist policies build millions of empty homes just to keep workers busy and tamp down economic unrest.
After the Chinese government gave citizens the right to buy their own homes in 1998, the middle classes invested heavily in the property market, primarily because there was nowhere else to put their money.
The result was a massive housing boom and although official statistics vary wildly, some economists claim that in the capital Beijing, prices rose by a staggering 250 per cent between 2006 and 2010.
Property investments account for a huge 14 per cent of China's total GDP with real estate and construction a major driving force in what is the world's second largest economy so a property crash could have repercussions on the global economy.
And in an interview with CBS News, Wang Shi, CEO of Vanke, China's largest residential real estate developer said Shi that if the property bubble were to burst, the plunge in home prices would spark 'Arab Spring' levels of social unrest.
China's property-related shares fell by the most in nearly five years on Monday after the plans to tighten the Capital Gains Tax rules, as well as other measures, were announced by the cabinet late on Friday.
Read more at: UK Daily Mail.
|Changes: Clerks at the Nanjing Municipal Real Estate Trading Centre struggle to cope with demand on the final day before the government introduces a mandatory 20% capital gains tax.|
|Empty homes for miles and miles and miles.|