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China restates plan to extend property tax program to new cities

A man watches a construction crane lift a piece of steel at the Shanghai Tower (R) at the financial district of Pudong in Shanghai January 2
A man watches a construction crane lift a piece of steel at the Shanghai Tower (R) at the financial district of Pudong in Shanghai January 2

BEIJING (Reuters) - China's cabinet on Wednesday restated its intention to extend a pilot property tax program to more cities and urged local authorities again to put price control targets on new homes, in the latest effort to calm frothy real estate markets.

The policy pledges - made in a meeting of the State Council chaired by outgoing Premier, Wen Jiabao - broadly restated measures China has rolled out in the past three years of steady campaigning to rein in excessive home price rises.

A statement of the meeting published on the government's website, www.gov.cn, said property prices are stabilizing and came as markets anticipated a raft of new measures to temper stubbornly high house prices.

It did not detail when and how the pilot property tax program - currently operating only in Shanghai and Chongqing at rates of between 0.5 percent and 1.2 percent - would be expanded.

Buoyant prices in some cities are mostly due to China's urbanization and shortages in home supply will likely persist in these places in the near term, the government said.

"In recent years, all localities and departments have carefully implemented the government's policies to control the property market," the statement said.

"(They) have achieved positive results by effectively curbing the speculative purchase of homes and gradually stabilizing the real estate market."

The statement, which listed five areas where the government can control the housing market, mentioned an expansion of property taxes in passing.

Some investors are expecting Beijing to announce new measures to temper stubbornly high house prices that have largely defied the government's cooling efforts so far.

Average home prices in China's 100 biggest cities rose 1 percent in January from a month earlier, a private survey showed, quickening from December's 0.2 percent rise in the eighth consecutive month of gains.

China is due to release official January home price data on Friday, February 22 at 0130 GMT.

China's attempt to control home prices is in its third year, although efforts were partly undone last year by the central bank's monetary policy easing and two interest rate cuts to boost a slowing economy.

Rising house prices anger ordinary Chinese unable to afford homes and threaten social stability. But falling home prices also unnerve investors who worry a property slump could hobble the world's No 2 economy.

China's Wen has pledged to restrain home costs, but average prices still rocketed 10 times in the country's biggest cities in the 10 years of his Premiership.

(Reporting by Langi Chiang and Koh Gui Qing; Editing by Nick Edwards and Sanjeev Miglani)

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