Hong Kong has implemented additional taxes and increased down payments on residential properties, curbing property price increases following the International Monetary Fund’s warning that asset inflation may derail the city’s economy.
Financial Secretary John Tsang said homes sold within six months of acquisition will incur a 15 percent stamp duty starting on Nov 19, and down payments to purchase homes worth more than HK$12 million (S$2 million) will increase to 50 percent, from the current 40 percent.
“The measures show the government is serious about curbing speculation, and that would impact on market sentiment, leading to a fall in home sales volume,” said Mr. David Ng, a Hong Kong-based real estate analyst at Royal Bank of Scotland.
“Home prices won’t see a decline immediately as speculators could still keep their stocks in the low interest rate environment,” he said.
Governments from around the world are acting to stem fund inflows into their markets, after the US Federal Reserve announced its plan to acquire an additional US$600 billion (S$780 billion) in government debt to help the US economy.
The Hong Kong government is resorting to increased taxes and tighter lending to rein in home prices that have increased over 50 percent since the start of 2009.
“The unusual surge in flat prices has attracted speculators; this coupled with quantitative easing measures has distorted the market expectation regarding inflation and asset prices,” said Mr. Tsang, adding that “the government is resolute in maintaining economic stability and curbing any threat to people’s livelihoods.”