BEIJING, Nov. 25 – In an effort to encourage spending and boost the slumping housing market, the Beijing government cut contract taxes on home purchases yesterday.

tarting November 24, homebuyers in Beijing will have their contract tax halved if the price is below a certain level. According to China Daily, this would mean that if a person bought a 120-square-meter apartment in the Wangjing area at the existing average price of RMB13,000 per square meter, they will have to pay a contract tax at the rate of 1.5 percent, instead of 3 percent because the total cost would be RMB1.56 million, over the municipal government’s tax benefit threshold of RMB1.65 million.

The Ministry of Finance had already cut the contract tax rate for apartments smaller than 90 square meters from 3 percent to 1 percent last month.

According to a 2006 municipal government rule, only people buying apartments smaller than 120 square meters for less than RMB9,300 per square meter (in the Wangjing area), for example, were eligible to pay a 1.5 percent contract tax. But as property prices have risen dramatically in Beijing in the past two years, it has become almost impossible for homebuyers to get a preferential tax treatment.

The Beijing municipal bureau of statistics announced on Saturday that the average price of apartments in October fell by 0.2 percent month-on-month, the first decline in property prices since 2005. Investment in apartments in the first three quarters of this year dropped 15.7 percent year-on-year.