Hong Kong may take more measures to cool property prices

Hong Kong may take further measures to control runaway property prices but the Asian financial centre is likely to avoid steps such as a capital gains tax which would be complicated, Hong Kong’s leader, Leung Chun-ying, said on Thursday.

Mr Leung’s government imposed a 15 per cent tax on non-resident and corporate buyers of property late last week and speculation has been rife that further curbs will be imposed.

Mr Leung told legislators in a question-and-answer session there was no such plan for the time being, while adding: “We don’t rule out any possibilities or any proposals.”

He said he wanted to ensure that the property market developed in a healthy manner.

“But we have to bear in mind that Hong Kong has been pursuing a simple and predictable tax regime. A capital gains tax would be rather complicated.”

While property prices grew across much of Asia in the second quarter, those in Hong Kong rose significantly. Prices in the city climbed 8.4 per cent in the second quarter, up from 1.8 per cent in the first quarter, realtor Frank Knight said.

To prevent the city being flooded with hot money after the United States announced an aggressive new stimulus plan to spur growth, Hong Kong’s central bank in September ordered banks to tighten up on mortgages.

That was followed by the new tax on non-resident buyers and other measures on Friday.

Mr Leung highlighted the extent of capital inflows into the city of seven million people.

“Capital is flowing into Hong Kong, into its property market. Some people buy luxury properties, we’ve seen soaring prices there … money is also flowing into shops, commercial premises and car parks,” Mr Leung said, referring to prices of parking spaces which have more than doubled in some districts in less than a year.

“Our positive non-interventionist policy is outdated given the internal developments and difficulties arising from the external environment. The government has to be appropriately proactive,” he added.

Source : Today – 1 Nov 2012

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