Debate Swirls as National Real Estate Information Database is Completed
After five years of work, the Ministry of National Resources has completed the National Real Estate Information Database. The new database consolidates information at the national level, replacing the old, and patchwork system of disconnected, local systems.
Already, concerns are arising about how the system might be used. Some believe that the database will be used as part of the proposed housing tax which, despite facing headwinds, is still expected to eventually be put into place. Others fear that properties will start being dumped into the market as multi-home owners and corrupt officials hurry to unload properties.
“The officials said the system is not for collecting property tax and not for identifying an individual’s property portfolio, but this has already struck fear in the hearts of many people,” said Soho’s China Chairman, Pan Shiyi.
Many analysts, however, doubt that there will be a significant rush to offload properties. While the previous system was more fragmented, it has long been used as a tool in government investigations, and analysts don’t believe that market behavior will change as the new system is introduced.
“The consolidation of national real estate information has started since 2013, and progress of the project has been announced intermittently over the course. If there is an impact, it would have manifested long ago,” said Rosealea Yao, a property industry analyst at Gavekal Dragonomics.
There is some expectation, though, that the system will be used to help provide a clear picture of the market and inform legislation. Ma Guangyuan, an economist and property issues commentator, says that a consolidated information database will help answer questions as basic as whether or not the country has overbuilt. Other commentators point to the property tax legislation as a clear use of the system.
“With the information on the platform, I believe government has already done internal assessment on at what rates, how many exemption areas the tax should include and how much tax could be collected. On the enforcement level, a solid database is a prerequisite for levying tax,” said Yao.
The decade-long property tax debate has recently been facing stronger opposition, with the 2019 deadline to complete legislation now an indefinite deadline. Regardless, most industry observers believe that the tax will eventually be set in place with a phase-in period, with 1st or 2nd homes being exempt.
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