Home builders' index & Jobs numbers Both down
Shanghai to Start Property Tax Trial
While US propaganda keeps plumping for another round of land-price inflation, some leaders try to avoid it and the recession that comes with it. Yet even they have not implemented the full program of no reckless subsidies, no counterproductive taxes, just public recovery of the socially-generated values of sites and resources coupled with a dividend for citizens from the surplus. We trim, blend, and append three 2010 articles from: (1) Bloomberg News, May 25, on Shanghai, by Jian Guo Jiang; (2) MarketWatch, June 15, on an index by Rex Nutting; and (3) The Christian Science Monitor, June 4, on jobs by Ron Scherer.
by Jian Guo Jiang, by Rex Nutting, and by Ron Scherer
Shanghai to Start Property Tax Trial
Shanghai, China’s richest city, will introduce a property tax policy on a trial basis next month, the Economic Observer reported.
The 21st Century Business Herald reported on May 14 the prospect of expanding a tax on commercial-use properties to residences. Zhao Duo, a real estate analyst at Sealand Securities Co. in Shenzhen, said “It may not need approval from the State Council for the tax because it’s a local tax. There’s speculation that Shanghai will tax only new purchases of large homes so the impact would be mild.”
China’s property stocks fell the most in more than a week today on concern the government is stepping up measures to clamp down on property speculation to tame asset bubbles. It has raised banks’ reserve requirements three times this year and restricted pre-sales by developers, curbed loans for third-home purchases, raised minimum mortgage rates, and tightened down-payment requirements for second-home purchases.
Prices for new homes in Shanghai dropped 16% in the week ended May 23 to below 20,000 yuan per square meter from the previous week, while transactions for new homes rebounded 27% from the previous week’s five-year low. China’s real estate prices rose a record 12.8% in April from a year earlier.
The government is trying to peel back the effects of a stimulus plan and $1.4 trillion lending binge.
Shanghai’s municipal government may levy an annual tax of about 1.5% of the value of properties, the Xiaoxiang Morning Herald reported. Sealand’s Zhao said today there was market speculation the tax might be around 0.8%.
JJS: What China is doing (and the US did not do) to avoid a housing bubble -- actually a land-price bubble -- bursting and triggering a recession, America could do to pull itself out of the doldrums, where it has been and probably will remain for months.
Home builders' index dives after tax break expires
US home builders grew pessimistic in June after a tax break for home buyers expired.
Sales had jumped 49% in the previous two months, spurred by the tax credit.
The housing market index dived to 17 in June from 22 in May, a three-year high.
At 17, the index shows that roughly one-in-six builders think the housing market is good.
Over time, the homebuilders' index correlates well with housing starts [and housing starts with economic growth].
Even with a 41% gain since early 2009, housing starts are down about 70% from the peak in 2006.
All three components of the index fell in June, and homebuilders were more discouraged in all four regions of the country.
"Builders still remain very cautious and are aware that several factors could impede the nascent housing recovery, including serious problems in obtaining financing for the production of housing, faulty appraisal practices and competition from short sales and foreclosed properties," said David Crowe, chief economist for a real estate lobbying organization.
The index was the lowest since it hit 15 in March. The five-point drop was the most since 2008 November.
At the peak in June 2005, the index reached 72; at the nadir in January 2009, it sank to 8. It's been below 50 for 50 consecutive months.
"The recovery in home building will be slow due to the elevated level of unemployment, tight credit conditions, high rates of homeowner and rental vacancy rates, and the high level of homes available for sale," wrote Gary Bigg, an economist for Bank of America Merrill Lynch.
JJS: People need jobs for money, even though jobs are a mixed bag, some producing useful output and some actually not. But until citizens receive a fair share of society’s surplus, of the commonwealth, jobs are the only hope most have for any income at all.
Jobs numbers for May squelch optimism
Private sector businesses added just 41,000 new jobs in May. Temporary US Census hiring accounted for most of the new jobs in May.
The economy gained 431,000 jobs and the unemployment rate slipped to 9.7%, down from 9.9% in April. The unemployment rate fell because there were fewer people looking for work, not because there was a jump in employment.
On the other hand, hourly earnings rose 0.3%, their best showing in five months. A longer workweek combined with higher wages increased payrolls by 0.7%, calculates Nigel Gault, chief economist at IHS Global Insight in a commentary. “Combine that with consumer prices, which probably fell in May, and that means a big increase in purchasing power for those with jobs,” he wrote.
JJS: Want purchasing power without inflation? Without excess production of goods and services with questionable value? Without depleting resources and polluting environments? Then geonomize and lose taxes on earnings while paying citizens a dividend from recovered rents. Works every time.
Editor Jeffery J. Smith runs the Forum on Geonomics.
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