Tuesday, November 9, 2010

China will allow local authorities to control gains in home prices

Ah, the intersection between central control and markets. It's like merging two expressways but doing it with a stop sign. This should be fun to watch.

China to Allow Control of Home Prices

Nov. 9 (Bloomberg) -- China’s government departments are drafting rules that will allow local authorities to control gains in home prices, the official business newspaper Securities Times reported today, citing people it didn’t identify.

Provincial regulators may be allowed to limit the selling prices of homes and cap profits for developers if prices gain sharply, the Shenzhen-based newspaper said.
I really can't wait to watch this.

China’s western city of Chongqing is ready to introduce a property tax, the Chongqing Morning Post reported yesterday, citing the local housing bureau.

We'll see if increasing the holding costs doesn't just drive the investors to flip more aggressively to cover this new expense. Or, since this is happening one region at a time, if the tax is egregious enough, will investors begin to sell out of this area first? And, who are they going to sell to without taking a loss?

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