Building a stable realty sector

The proposed property information registration system and launching of property tax will establish order in housing market

China has vowed to build a complete property registration system and set up a fully operational information platform for property registration under the Ministry of Land and Resources by 2017. The move is expected to have a profound impact on the real estate sector.

The system, expected to become an integral part of the country's property protection system, must be based on thorough and unified information on registration of landed assets such as plots and buildings, and forestland.

Information about such assets are now scattered among different government departments. For example, the Ministry of Housing and Urban-Rural Development provides information on housing and the Ministry of Land and Resources does so on urban and rural land use. Moreover, the lack of proper information sharing among different regions hampers countrywide property regulation and transaction.

Although the information registration system is not directly targeted at the real estate market, it indeed will have an impact on the sector. The government move has the potential to force some corrupt officials to dump their properties, leading to a drop in housing prices; it is also expected to expedite the launch of property tax across the country, which will deal a heavy blow to the real estate sector.

As China's anti-corruption campaign presses ahead, some exposed corrupt officials have been found to own a large number of apartments and houses. For example, the director of a coal bureau in a Shanxi county owns 35 properties, most of which were bought using illegally earned money, says a Xinhua report. Since the estimated number of properties held by officials at various levels is huge, the new property information registration rules could force them to sell many of their apartments and houses and thus expose them as being corrupt.

Besides, given the huge number of such properties, the sell-off could help drive down property prices. No one could calculate the real impact, though, because of lack of foolproof information.