With China's tight constraints on citizens' investing outside the country, savvy investors have sunk their money into real estate, often purchasing multiple units. This consequently is driving up the property values and thereby pricing the relatively low-income folks out of the market, according to a New York Times blog from November 2013.
The country is reportedly planning to create a nationwide property ownership tracking system that will ostensibly monitor and scrutinize real estate sales transactions. This, the Times says, could pave the way for China to move closer toward its ultimate goal, which is to levy a new, broad tax on property ownership in an attempt to stem the tide of high-income citizens and government officials buying up multiple properties in spite of the communist nation's aforementioned tight real estate ownership restrictions.
In January, the Wall Street Journal reported that this type of property tax could not only take aim at the rampant hoarding of real estate properties, but also address the attendant issue of apartments sitting empty, while landlords and property managers hold out for the highest bidder. The tax would make renting out these units, most likely at a relatively lower rate, more financially beneficial than leaving them vacant.
On the flip side, a tax of this nature would mandate that government officials disclose their individual real estate holdings. This hurdle may wind up being too high to clear, some analysts say, because it would uncover a monumental scale of corruption and illicit income.
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