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HK moves to cool property
Source: Agencies |
November 20, 2010, Saturday
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Print Edition
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HONG Kong imposed new measures yesterday in its latest bid to avert a property bubble, raising stamp duty on some transactions and tightening mortgage restrictions.
The International Monetary Fund on Thursday urged Hong Kong to draw up more policies to take the heat out of the real estate market, which has seen prices of luxury flats exceeding 1997 peaks by about 10 percent.
Overall, housing prices have risen about 50 percent since the beginning of last year due to brisk buying by Chinese mainlanders and low mortgage rates in Hong Kong, which tracks United States monetary policy because its currency is pegged to the dollar.
Authorities in other Asian economies, including the Chinese mainland, Thailand and Malaysia have announced similar moves to cool their property markets over the past month.
With effect from today, buyers in Hong Kong will be slapped a stamp duty of 15 percent on housing transactions conducted within six months of the owner buying the property. A duty of 10 percent will apply on transactions between six and 12 months and 5 percent on those between one and two years.
The government will also lower the loan-to-value limit - the percentage of a property's value that can be mortgaged - with immediate effect.
"Hong Kong's latest moves are quite lethal and will definitely curb short-term speculative activities," said Marcos Chan, head of research at Jones Lang LaSalle.
Hong Kong Monetary Authority Chief Executive Norman Chan said properties valued at HK$12 million (US$1.5 million) or above will have a loan-to-value ceiling of 50 percent instead of the current 60 percent.
The ceiling for properties valued at HK$8-12 million will be cut to 60 percent from 70 percent.
"As a result of global financial conditions, the local property market has become increasingly exuberant of late. This is causing much concern in our community," Financial Secretary John Tsang told a news conference. "There is a heightened risk of property bubbles forming."
The moves, which were announced after the market closed, will likely pressure Hong Kong's stock markets and property shares on Monday.
The International Monetary Fund on Thursday urged Hong Kong to draw up more policies to take the heat out of the real estate market, which has seen prices of luxury flats exceeding 1997 peaks by about 10 percent.
Overall, housing prices have risen about 50 percent since the beginning of last year due to brisk buying by Chinese mainlanders and low mortgage rates in Hong Kong, which tracks United States monetary policy because its currency is pegged to the dollar.
Authorities in other Asian economies, including the Chinese mainland, Thailand and Malaysia have announced similar moves to cool their property markets over the past month.
With effect from today, buyers in Hong Kong will be slapped a stamp duty of 15 percent on housing transactions conducted within six months of the owner buying the property. A duty of 10 percent will apply on transactions between six and 12 months and 5 percent on those between one and two years.
The government will also lower the loan-to-value limit - the percentage of a property's value that can be mortgaged - with immediate effect.
"Hong Kong's latest moves are quite lethal and will definitely curb short-term speculative activities," said Marcos Chan, head of research at Jones Lang LaSalle.
Hong Kong Monetary Authority Chief Executive Norman Chan said properties valued at HK$12 million (US$1.5 million) or above will have a loan-to-value ceiling of 50 percent instead of the current 60 percent.
The ceiling for properties valued at HK$8-12 million will be cut to 60 percent from 70 percent.
"As a result of global financial conditions, the local property market has become increasingly exuberant of late. This is causing much concern in our community," Financial Secretary John Tsang told a news conference. "There is a heightened risk of property bubbles forming."
The moves, which were announced after the market closed, will likely pressure Hong Kong's stock markets and property shares on Monday.
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