A Chinese clerk counts RMB (renminbi) yuan banknotes at a bank in Huaibei city, East China's Anhui province, January 22, 2015.[Photo/IC]

On Feb 19, the Ministry of Finance, the State Administration of Taxation, and the Ministry of Housing and Urban-Rural Development jointly issued a document to reduce the tax burden on homebuyers.

According to the document, the deed tax will be reduced from 3 percent to 1.5 percent for first-time buyers of properties larger than 90 square meters and to 1 percent if the property is smaller than that. This will apply nationwide.

Those purchasing a second home will also pay 1 percent if the property is under 90 sq m and 2 percent if the property is larger than that.

This excludes purchases in Beijing, Shanghai, Guangzhou, and Shenzhen, the so-called first-tier metropolises, where the demand for housing has already pushed up prices.

The tax reductions are viewed as being aimed at real estate destocking. However, while doing little to promote housing sales in smaller cities, it has stimulated the second-hand property trade in the four metropolises.

In Shanghai there are frequent reports about property sellers raising prices by 10 to 20 percent, while Beijing saw 864 houses being sold every day in the first week after Spring Festival, the highest daily average of sales since 2010.