The latest measures implemented by the Hong Kong government to control property price speculation have achieved some success, said chief executive Donald Tsang.
“The preliminary response from the market shows that the measures have exerted a certain level of impact,” said Mr Tsang. “We will closely monitor the situation and launch further measures if necessary.”
The HK government recently announced higher downpayments for some mortgages and additional stamp duties on short-term property holdings to curb speculation after prices gained more than 50 percent since the start of last year.
Data from Centaline Property Agency Ltd. shows that home sales fell 83 percent last weekend from the previous week.
“The government is worried that banks’ asset quality will be affected if there is a sudden turnaround in the market,” said Wong Leung-Sing, associate director of research at Centaline.
Prices may see a 5 percent decline in the next three months and rebound after investors “have adapted to the new rules and secured necessary funding to buy property”, added Mr. Wong.
The measures will have a “significant short-term impact”, said analysts at Credit Suisse Group, with transactions down 40 percent by year end.
On November 19, Financial Secretary John Tsang announced that homes sold within six months of acquisition will incur an additional 15 percent stamp duty. Those resold between six months and 12 months will be charged 10 percent, while those resold between 12 months and 24 months will incur 5 percent.
The new stamp duty comes on top of the current stamp duty of up to 4.25 percent, which differs based on the transaction value of the home purchased.
Meanwhile, downpayments for homes worth HK$12 million or more will increase to 50 percent from 40 percent, while downpayments for homes worth HK$8 million to HK$12 million will rise to 40 percent from 30 percent, said Norman Chan, chief executive of the Hong Kong Monetary Authority.
The maximum loan to value for non-owner occupied residential homes will be lowered to 50 percent, added Mr. Chan.