Shanghai will be less attractive to professionals if the housing issue isn't properly addressed, Shanghai Party Secretary Yu Zhengsheng said yesterday.
The view mirrored the Shanghai government's plans for this year, as housing is among the main issues targeted to improve living conditions in the city.
A property tax is in the pipeline as Shanghai bids to curb housing speculation.
"The property tax is not only aimed at cooling home prices," said Xu Yichao, a Shanghai People's Congress deputy and head of the Shanghai Real Estate Science Research Institution. "It also creates a fiscal income channel for local government to spend on infrastructure and cut its reliance on land auctions."
Previous reports have said that Shanghai may launch its property tax in the first quarter of this year, collecting the tax on new homes.
The city may tax families who have a floor area of more than 200 square meters or 70 square meters per person. The tax rate is likely to be about 0.5 percent, according to reports.
At a group discussion of deputies of the Shanghai People's Congress, Xu told local lawmakers that details of the tax had yet to be finalized.
Meanwhile, local lawmakers are asking for a bigger supply of affordable homes.
"Housing prices are too high," Nie Guanghe and Li Guodi said in separate submissions on how the city should improve its service to the public.
Shanghai plans to build 15 million square meters of affordable homes this year.
Shanghai's existing housing index rose for the fourth consecutive month in December amid recovering sentiment among home buyers.
The index, which monitors price fluctuations of existing homes across the city, gained 8 points to 2,566, the Shanghai Existing House Index Office said earlier this month.
New home prices also rose with the average price reaching a record high in December amid strong demand. New homes, excluding those designated for relocated residents, sold for an average 24,176 yuan (US$3,652) per square meter in December, up 7.6 percent from November and a growth of 21 percent from January.