China may cut home buying costs

Many more Chinese are buying their own homes

China's authorities are considering property tax cuts that could halve the cost of buying a home for ordinary Chinese, the state media reported.

The reports coincide with changes to the constitution to protect the right to private property for the first time since 1949.

Economic data released on Monday also showed rises in consumer spending.

Consumer spending grew 10.5% in January and February, compared to 9.2% in the same two months of 2002.

The government sees rising consumer spending as a vital part of its strategy to maintain China's runaway economic growth, which topped 9% in 2003 and is targeted at 7% this year.

Transparency

Under current Chinese laws, developers have to pay dozens of taxes and fees which are then passed on to home buyers.

Such fees can make up more than half the cost of a home, the China Daily newspaper reported.

Since last October, the government has been considering proposals from the China Real Estate Development Group to make new housing more affordable.

The proposals would simplify the web of local land and property taxes into a unified national system which would be more transparent and contain costs.

Home buyers would have to pay an annual tax based on the value of their home until they had cleared their mortgages.

The newspaper cited an official of the State Administration of Taxation as saying a unified land tax system and lower fees is a priority though nothing has yet been finalised.

Many more middle class families are buying their own homes, in preference to living in flats owned by state run firms.

The latest consumer spending figures showed car sales were up 60% on year-earlier, as were telecoms equipment purchases.

Higher sales of cars, telecoms and oil products such as petrol made up nearly a quarter of growth in consumer spending, though only 6.5% of total retail sales, the National Statistics Bureau said.

Another lynchpin of China's boom also held firm in January and February, as investment by foreign firms rose 10.3% to $8.3bn (£4.5bn), the Commerce Ministry said.