The current Chinese property tax pilot will not be expanded this year, pushing the possibilities of an increased burden on local property markets and liquidity pressures on developers further down the line due to the current situation in the sector, reports Caixin. Although some cities have carried out investigations and preliminary research for the program, the conditions for expanding the pilot cities for the property tax reform “are not available this year considering all aspects of the situation,” according to a report by the state-run Xinhua News Agency, which cited the Ministry of Finance.
The statement is seen as a signal to stabilize investor expectations toward the gloomy property sector mired in debt crises. China’s national legislature in October authorized a five-year pilot program to test a new property tax in some regions, without specifying the regions. Industry participants previously expected the measures to be introduced this year.
Analysts have previously said that while the pilot would disrupt some cities’ property markets in the short-term, it would likely pay economic dividends in the long-term, such as putting local government finances on a better footing.