What Are Govts Doing To Check Property Prices?

Rising property costs are not India's problem alone. Other countries, too, have gone through such troubled times, and their respective governments have tried different approaches to tame them. Here's a look:

Pakistan

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Let's talk about our neighbour first. In the past four years, Pakistan's real estate market was bullish. However, in the Budget 2016-17 it was decided that all properties would be evaluated by valuers at State Bank of Pakistan only, and not by local governing authorities. The market price of the property would be fixed and would be documented in the books of the land revenue department. A concept of advance tax was also introduced for properties priced above Rs 3 million and the rates have been revised along with an increase in stamp duty by 50 per cent and a registration value of one per cent. Capital gains tax, too, has been revised and would be applicable for properties held for five years and at 10 per cent.

Hong Kong

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As per reports, the disposable income of homebuyers in this country has risen by 61 per cent since 2003 but cost of property has jumped 364 per cent during the same period, making it the world's most expensive property market. Raising stamp duty had but little impact on checking property prices. Therefore, the government has decided to bar homebuyers from going in for more than one flat. Also, construction loans to developers are being capped and buyers trying for a loan for properties priced above $1.30 million would get only 50 per cent of the value while those priced above $10 million would not get more than 40 per cent.

China

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At a meeting in December 2016, the Chinese President said that houses were built to be inhabited, not for speculation. After that, a series of curbs was announced. Developers are capping prices of residential properties even in the prime locations. Recently, the Urban Planning, Land and Resources Commission of Shenzhen Municipality stated that builders would not be granted permits if they set prices higher than the regional average.

Also, it is expected that mortgage rules and requirements would be tightened. Beijing had already cut its mortgage period from 30 years to 25 years.

Australia

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Come January 2018, and homebuyers in Victoria would be taxed for leaving their home vacant for more than six months. Naturally, homes occupied by those who are temporarily abroad or have holiday homes or where infrastructure is dead will be exempted but this move is expected to make housing affordable for first-time homebuyers.

The government believes that improving the inventory number would ensure more supply and, thereby, rationalise property prices. Capital gains tax discount for affordable-housing investments, offering lower-tax options for first-time homebuyers and encouraging seniors to downsize their homes is the government's agenda. However, analysts are saying that cheap housing finance should be curtailed first.

Canada

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The Canadian government is in no mood to make home buying simpler and that is justifiable.  First-time buyers in Ottawa can deduct up to $25,000 from their retirement savings to help fund their home's down payment but a proposal to raise that limit has been turned down. A tax on foreign speculators is also being discussed to be applicable on those who buy properties for speculative reasons only but analysts believe that this would be a lukewarm approach as such speculators would hold the property longer just to avoid the tax.

In Vancouver, prices cooled a little owing to a 15 per cent land tax transfer on foreign homebuyers as also tightened measures in case of mortgage defaults.

Click to find out what the US, UK, Russia are doing to offer low-cost housing to homebuyers.