Haikou Considers End to Property Purchase Restrictions as Market Cools - Updated

By Jia Huajie
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Published: 2011-04-26

 

Economic Observer Online
Translated by Guo Wei
Apr 26, 2011
Original article: [Chinese]     


Haikou is reportedly considering doing away with the purchase restrictions that it placed on certain kinds of housing last year.

Haikou is the first of any of the dozens of cities across China that introduced the restrictions over the past 6 months to consider dropping them.

The Haikou government has been forced to act following a marked downturn in real estate revenue as a result of the introduction of the restrictions.

On April 20, Ji Wenlin (冀文林), the mayor of Haikou, said at a meeting of the Haikou government that "in order to make the most of the preferential policies that the State Council has provided to Hainan, we plan to keep to the principle of limiting prices and not restricting purchases, and we will release the rules for implementation soon."

According to the data from the Haikou Tax Bureau, in the first quarter of this year, revenue from land-use tax, urban building and maintenance tax and land appreciation tax have fallen compared to the same period last year. In March, tax revenue collected from the construction sector was 44.25 million yuan, down 33.1 percent on the figure for last March, revenue collected from the real estate sector amounted to 59.37 million yuan, down 67.9 percent on the same period last year.

In addition, the amount of land appreciation tax collected in the city over the course of the first quarter was 140.9 million yuan, down by 32.9 percent on last year.

Our reporter has learned that in 2010, revenue from the real estate industry in Haikou made up more than a quarter of the city's fiscal revenue, the growth in revenue was almost equal to half the amount of total revenue.

In March, 302 apartments were sold in Haikou, a fall of 90 percent on last year's sales figures. Despite the fall in the number of transactions, prices have managed to remain stable and even increase slightly.

What's worthy of attention is the fact that over Jan and Feb, there was 4.98 million square meters of floor space under construction, down 9.4 percent.

A total of 215,400 square meters of property exchanged hands during the same period, down 46.7 percent on the first two months of 2010.

Property sales by value totaled 1.815 billion yuan, a drop of 52.8 percent on last year's figure.

43.2 million yuan in urban maintenance and construction tax was collected over the period, 2.53 million yuan less than that collected over the same period last year, or down 5.5 percent.

Haikou's purchase restrictions were only announced on Feb 28 this year. The policy placed restrictions on both residents buying of property in the city and also severe restrictions on residents from other provinces.

Local residents were prohibeted from buying more than two properties, with certain conditions also being placed on family members who attempted to buy a second property.

A temporary freeze was also put on all transaction involving non-residents who were unable to provide proof of tax and social security payments.

It's said that 60 percent of those who purchase property in Haikou are not from Hainan.

Haikou's mayor said that the city needs to improve system used to auction off land, to hasten land transfers and to maintain stable land revenue.

According to reports, all land transfers in Haikou have been in a state of "temporary suspension" all year.

Ji Wenlin was formerly a member of the Party Group and office director in the central Ministry of Land and Resources. He was only appointed mayor of Haikou in Feb 2011.

 

Update: Officials from Haikou's Bureau of Housing and Urban-Rural Development and Finance Bureau have come out and rejected earlier reports that the city plans to remove policies that limit property purchases introduced in February this year as part of a nationwide campaign to rein in soaring housing prices.

According to The Beijing News, Dai Kaiquan, a section chief at the Haikou Bureau of Housing and Urban-Rural Development's Market Management Department told reporters yesterday that Haikou will continue to strictly enforce real-estate related policies issued by the State Council, including purchase restrictions.

"We will limit the growth of newly-constructed housing prices to below the rate of growth of average disposable personal income."

In addition, Pang Gexin, head of Haikou Finance Bureau, said that the introduction of purchase restrictions has had a very limited impact on fiscal revenue in Haikou. Haikou collected 4.81 billon of fiscal revenue in the first quarter, 16.5 percent higher than that of the same period last year. General budget revenue reached 4.59 billion, also 16.1 percent higher than that of the last year.

Purchase restrictions won't have that much of an impact on Haikou's fiscal revenue.

 

Links and Sources
Haikou Travel Guide: Image

The Beijing News: 海口否认拟停止限购令 (Chinese)

This article was edited by Paul Pennay