In the latest move to promote the construction and sale of small apartments in the booming real estate market China is considering levying a tax on the building of big apartments.

According to Liu Zhifeng, vice minister of construction, the ministries of construction and finance and the State Administration of Taxation are jointly studying the feasibility of levying a tax on owners of large homes including the imposition of the long-disputed property tax.

"After the new tax is implemented people buying large houses will also have to pay for their usage," Liu said over the weekend in an address to an awards ceremony for small homes designs.

He said the new tax was targeted at discouraging people from buying big houses. "Just like in the auto market where consumers capable of buying an expensive car may not be able to afford the fees involved in maintaining that car some home buyers might give up the idea of buying big houses when taking into consideration the usage fees," Liu said.

In addition to the levy on big homes the country was also planning to award designers of small homes, Liu said.

Normally design fees are charged in accordance with the size of the house. Designing small houses is more complicated and less profitable. 

He said the country's current real estate market lacks small-sized houses for buyers. "A house less than 90 square meters should be the mainstream in the real estate market," Liu said.

He said increasing the supply of small and affordable houses was the only way to solve the country's dilemma of a huge population and insufficient land resources.

A survey by the ministry in April shows that the average size of a house for sale in 40 medium-and-large-sized cities is 113 square meters. In Beijing, it’s 143.9 square meters.

(China Daily December 18, 2006)