Impacts Of Property Tax On Residential Real Estate Market

Ever since the housing marketization reform since 1998 in China,the housing prices in large and medium cities frequently reached new highs,which seriously distort the resident s’ consumer behavior and result in the large investment and speculation in the property,so how to suppress the rapid rise in housing prices has become the focus of the Government’s macro-control problems.But our current real estate taxes and fees are heavy in the circulation but light in the tenure,which cause the lack of automatic stabilizer in the property tax.To play the regulation role of property tax,State selected Shanghai and Chongqing as first policy experiment city starting from January 28,2011.Whether the Property tax pilot reform produced good regulation role in six years of run time or not,which relates each bit resident’s vital interests and people’s livelihood,so to research the economic effect of the property tax reform on property market is urgent needed.Taking Shanghai,Chongqing property tax reform as example,we first make a qualitative analysis of the impact on housing prices using land rent theory,tax incidence theory,supply and demand analysis theory and modern asset pricing theory.The theoretical study shows that high rent in the new residential market push the upswing in house prices and that the heavy tax burden of secondary-residential-market-trade also contributed to the upswing through passing on to home buyers,and taxes has passed on so smoothly due to the consumer and investment rigid demand as well as the dynamic intertemporal supply of the real estate developers and holders of secondary.The residential property taxes,which increases the cost of real estate in the tenure,can effectively inhibit the investment and speculative demand so as to curb rapid increases in housing prices.In the 4-7 chapter,we distinguish new residential market and second-hand residential market and make a quantitative analysis taking advantage of the experience data,which is from the National Bureau of Statistics that publishes annual average home-price for main city from 2007 to 2015 and monthly home-price indexes for 70 cities from 2011 to 2016.The experience analysis showed that,the short-term and medium-long-term effect of reform pilot policy on property market in Shanghai and Chongqing distinct.Shanghai model focused on foreign investors,who have strong speculative,so Shanghai’s reform effectively reduced prices in the short term,but long term effect is not obvious.Chongqing model,which focused on high-value homes because of the high speculative space but most of the ordinary residential homes just as a necessity,lead to Chongqing’s speculators switching to the ordinary residential homes instead of high-value homes and the average housing price’s driving up,but house prices in the medium-long term growth rise distinctly slowly compared with Shanghai because the excessive investments on ordinary housing are curbed owing to the little gain from ordinary housing.Therefore,to full play the regulation role of property tax on residential real estate market,some policy recommends are proposed based on the summary of pilot run experience in Shanghai and Chongqing to make best use of the advantages and bypass the disadvantages: first to straighten out and integrate the real estate taxes and fees;while also to take "wide tax base" as core,develop reasonable tax relief measures,implement area differences of progressive tax,and to further perfect the property market value assessment system.