Hong Kong’s government on Friday unveiled its latest attempt to cool the red-hot property market, amid public anger at spiralling prices and fears highlighted by the IMF of a real estate bubble.
Financial Secretary John Tsang announced a sliding scale of new stamp duties to take effect midnight Friday aimed at restraining what he called “short-term speculative” inflows into the glitzy financial hub’s property market.
“These are extraordinary measures under exceptional circumstances. Our aim is to curb short-term speculative activities and to reduce the risk of any asset bubble,” Tsang told journalists.
The densely populated city of seven million is famous for its sky-high residential rents and super-rich tycoons. It notably attracts wealthy buyers from mainland China looking for a relatively safe place to invest with high living standards.
But the International Monetary Fund this week urged Hong Kong to rein in soaring prices, amid fears that overheating is spreading from high-end luxury properties to the general market.
Under the levies outlined by Tsang, anyone reselling a property within six months of purchase would be subject to a hefty 15 per cent stamp duty. A 10 per cent duty would apply to sales within six-to-12 months and five per cent to sales within 12-24 months.
Luxury home values in the former British colony recently topped their pre-1997 Asian financial crisis peak, according to government data released in October.
Friday’s announcement marks the latest in a series of measures already taken to cool the ever-expanding market.
Stamp duty on luxury property was hiked by half a percentage point in April to 4.25 per cent, while a number of government land auctions have been held to increase supply.
But prices have crept ever higher, and are up 20 per cent in the past year.
The IMF warned in a report on Thursday that, “depending on the amplitude of the upswing, the resulting downturn could prove both protracted and painful”.
Concerns have been amplified after the Federal Reserve unveiled a massive stimulus package to kick-start the US economy, raising fears that a flood of speculative money could overheat Hong Kong’s volatile asset markets.
The Hong Kong dollar is tied to the greenback, although the IMF reiterated its support for the city’s currency system, calling it a “robust anchor of monetary and financial stability”.
Earlier this month, the city’s biggest realtor, Centaline, recorded the highest commercial property price per square foot in Hong Kong’s history.
A 79th floor unit in The Centre – a downtown skyscraper owned by Hong Kong’s richest man Li Ka-shing – sold for 338 million Hong Kong dollars (44
million US dollars), or about 25,580 Hong Kong dollars a square foot.
Homes with a price tag of at least 20 million Hong Kong dollars have surpassed previous highs for both the number of transactions and total sale proceeds, Centaline also said.
Spillover into the lower-end property market, where the vast majority of Hong Kong people live, has seen prices creep ever further beyond the reach of average incomes.
In October, Hong Kong’s leader announced a halt to automatic residency for wealthy property buyers, in a move that analysts said was aimed squarely at cash-rich investors from mainland China.
At a rowdy legislative session that was dogged by about 200 protestors denouncing high property prices, Chief Executive Donald Tsang said: “Housing is currently the greatest concern of our people.”
Source : Channel NewsAsia – 19 Nov 2010
The problems with govts around the world is that they are very good at rolling out billions of stimulus money into the market but are reluctant to roll back bcos of greeds. It is a myth to claim that when it is rolled back the economy will be badly affected. Not to do so will be more disasterous in the coming months. Just look at those measures which they have taken…a mere slap at the wrist. These measures which they have taken will only confused the markets as at best they are half-hearted attempts to satisfy the general populace. IMF should be more determined to get countries like India, China, the US, EU to take drastic measures to roll back the damaging stimulus money now. China should be serious to restrict its major banks and SOE to stop lending money to the developers and property buyers.. with tougher cooling measures. Stop the outflow of money to other Asian countries. India and China should invest in the US and EU by buying into their property markets..both residential and commercial as well as industrial.