[photopress:China_apartments.jpg,full,alignright]The revived capital gains tax imposed on Chinese real estate developers has brought hope to many Chinese citizens who cannot afford to buy an apartment. The government has announced the enforcement of a land appreciation tax of 30% to 60% on net gains made from all property development deals.
Tian Yu, a 23-year-old girl who graduated last summer and now teaches at a Beijing-based university, said, ‘It is a lot of money. Will the government build more affordable houses for us with it?’
According to the regulation, the government will collect the tax as soon as development projects are finished or transferred but there is no indication how the tax revenue will be spent.
Figures from the National Bureau of Statistics showed that the price of newly-built apartments in Beijing rose 10.4% year-on-year last December. New apartments within Beijing’s fifth ring road have all seen their prices exceed RMB10,000 (US$1,200) per square meter. For young college graduates in Chinese cities, buying an apartment near their offices has become mission impossible. The government finances a few real estate projects and sells these ‘affordable houses’ to young people every year. But compared with the huge demand, they are far from enough.