Hong Kong is still one of the hottest places to live in the world – and prices are overheating so much that the government is taking yet more measures to cool them.
The government has doubled the stamp duty on the city’s most expensive luxury apartments and hiked flat fees for homes worth up to £170,000.
Stamp duty is now 8.5% – up from 4.25% and the £8.40 flat fee is now 1.5% of the property value.
The aim is to put off foreign buyers speculating on investment property as local residents who are buying to live in a home are exempt from the charges.
The problem in the city is affluent middle-class Chinese are swooping on property bargains in the city at the expense of residents, driving up process and rents.
Home prices up 65%
“The risk of an asset bubble is increasing,” said John Tsang, Hong Kong’s finance minister. “Maintaining a healthy, stable property market will be our ongoing endeavour. We shall continue to monitor the market closely and I will not hesitate to introduce further measures when necessary.”
The stamp duty hike is the latest in a series of steps to take the heat out of the market and follows a 15% tax on foreign investors, strict mortgage rules and higher taxes on back-to-back sales.
Despite the moves, property analysts Knight Frank fear the cooling measures are taking effect on the market.
Home prices were up 65.2% in January, while top-end homes worth £850,000 or more increased in value by 58%.
Experts predict the trend will continue because few new properties will complete before 2015, creating a low supply/high demand market.
Although demand will outpace supply, says a Knight Frank spokesman, prices should remain stable and may only rise another 5% this year.
A signal from the government that prices are stabilising came with what was not said in a policy address from Hong Kong’s chief executive.
The speech included proposals for releasing land and planning to increase housing supply, but did not mention any more restrictions on sales to foreigners or tighter mortgages.
‘In the short term, demand will continue to outstrip supply, but the government may introduce further tightening measures should home prices surge again,” said Lann. “Therefore, home prices are set to remain stable with upward or downward movements within 5% this year.”
Home sales generally slow around the Chinese New Year, but February’s figures will show whether the latest bid to curb prices has worked.