Hong Kong unveils fresh property curbs



POSTED BY Ed (13 mths ago)
Hong Kong will raise stamp duties on property transactions for the first time in three years, the latest effort to check an overheated property market buoyed by capital inflows from China.

Hong Kong's real estate is among the most expensive in the world and property experts have forecast that home prices will rise further this year. Skyrocketing property prices have added to growing discontent in the city, with its population already under strain from high living costs and a widening wealth gap.

The government will raise stamp duties on home purchases to 15 percent, across the board, effective Nov. 5, to dampen a red-hot market which has failed to respond to a raft of measures taken by policymakers in recent months.

"We expect the measure to have an immediate and effective cooling impact," Financial Secretary John Tsang told a news conference.

First time local home buyers will be exempt from the latest policy tightening measures with stamp duty ranges remaining from 1.5 percent to 4.25 percent depending on the value, officials said.

Hong Kong home prices surged in September for the sixth consecutive month to hit the highest level in nearly a year, government data showed on Monday.

Soaring property prices this year are in stark contrast to the slowdown in the overall economy, as evident from flagging retail sales and slowing economic growth, and industry officials said renewed mainland purchases had been a key factor behind the rise to escape a depreciating yuan currency.

Chinese investment into Hong Kong properties perked up in recent months both in the primary and the residential market after showing sluggish growth most of last year, according to data from Midland Realty, a real estate agency.

But property analysts expect the measures to have limited impact on prices in the short term.

"Under the current new policy, in the next two months we can expect the transaction volume to drop 20 to 30 percent but this will have limited impact on property prices," said Thomas Lam, senior director at consultancy, Knight Frank.

Another of the city's largest property agencies, Centaline Property Agency Ltd, earlier forecast that home prices would return to peak levels in the fourth quarter this year.

More http://www.reuters.com/article/us-hongkong-property-measures-idUSKBN12Z13L?il=0


traineeinvestor (13 mths ago)
Looks like the HKSAR Govt still hasn't heard about the law of supply and demand. If they want to bring prices down, they need to increase the supply of land available for residential development.

While doubling the stamp duty will deter many potential buyers, it will also have other effects including:

1. making people even less willing to sell existing investment properties = less supply in the secondary market;
2. reducing growth in the supply of rental properties = higher rents in the longer term.

Hoping for some misguided panic selling in developers on Monday.

Ed (13 mths ago)
I don't imagine that would help much .... these are chunks of the trillions of dollars of liquidity that is flowing through the global economy looking for a place to be parked...

It would appear that if the government were not to step in and try to cool the market that no matter how many apartments they would build -- they would be purchased...

It is not a normal market ... it is a frankenstein abomination.

It is one of the many toxic side-effects of the massive stimulus from central banks that cannot end.

If you tamp it down it just emerges somewhere else... as we have recently seen in China the hot money rammed into the commodity market pumping that up .... it rammed into the stock market doing the same ... and the flavour of the month appears to be China HK property ...

Prices are through the roof in China.... and loads of those properties are empty ... and the kicker -- the 'investors' don't seem to be concerned about generating a return ...

They sit them empty with the expectation that prices will rise.... forever...

Hmmm.... where have we seen this story play out before....


Ed (13 mths ago)
A similar study in Melbourne last year which analysed water usage suggested more than 80,000 properties, or 4.8 per cent of the city’s housing stock, appeared to be unused.

The issue of “ghost houses” left empty by often foreign buyers willing to forgo significant rental income has been a cause of controversy, although much data remains anecdotal.

Jason Anderson, chief economist with leading property advisory MacroPlan Dimasi, has estimated that a further 10,000 new homes will be purchased and left empty by Chinese buyers over the next five years.

Canada and Singapore, facing the same phenomenon, have proposed different solutions. Singapore imposes a 16 per cent investment tax on ghost houses, while in Vancouver there is a proposal to impose a property tax on all homes, with homeowners who live in or rent the property exempt.


Ed (13 mths ago)
Hong Kong’s Leaders Move to Cool World’s Highest Home Prices

“It’s unexpected. It’s a very heavy measure and shows the government is very
determined to cool the property market,” Louis Chan, chief executive of the residential unit of Centaline Property Agency Ltd., said in an interview. Chan said he now expects a 5 percent to 8 percent drop in prices, after projecting an increase of similar magnitude before the stamp duty increase was announced.

Mainland buyers hedging against a falling yuan and an abundance of financing have undone the government’s previous attempts to make housing more affordable.

The city has the world’s most unaffordable property market, stoking discontent about inequality and lessening its appeal to expatriates. Senior officials also voiced concern that soaring prices could threaten financial stability.

“Property risks have been increasing with the rapid surge of prices and transactions," Financial Secretary John Tsang said. “We have to prevent the risk of property bubble from worsening, which in turn can threaten our economy and even the stability of the financial system.”

“We all think pricing is crazy,” said Denis Ma, head of research for Hong Kong at Jones Lang LaSalle Inc., referring to prices paid at land auctions.


gdep (13 mths ago)
All you need is countries to relax their immigration policies and you will see a big influx of people from China/India to their economies - Australia, NZ, Canada, USA, Europe etc and voila you have solved the problem..

the issue now is we advocate free movement of capital, goods without free movement of labour.. that does not work.. and things are going to get worse if the Donald becomes president

OffThePeak (12 mths ago)
Hong Kong Rally Ending?

My view is that the share prices of HK Property Developers often provide an early warning of moves in the HK property market.

And one of the best bellwether stocks has been :

HK-12, Henderson Land ... 4-years

This chart suggests that the rally up from the Q1-Low has ended or is ending soon.

My view is that the HK property market is likely to fall for 3-5 years from the peak, and thus into a 18-year cyclical Low of perhaps 2019-2021.

The last low was 2003, and it was delayed from the "ideal" window of 2001, because of SARS-related disruptions

booth (12 mths ago)
This new rule only benefits the developers and forces people to buy new property and allows developers to control the market prices. They are the only option to buy from, and they offer private mortgages not in line with HK mortgage rules.

This also affects HK residents who want to buy a second home, upgrade homes, or anything. It really stalls life for many, difficult to sell, difficult to buy. New mortgage rules affect the second-hand market ability to buy and sell flats too.

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