HONG KONG — Hong Kong is raising stamp duties and trying to restrict home loans, officials said Friday, to cool down a real estate market that has some of the most expensive apartments in the world.
Financial Secretary John Tsang said “exuberance has regained momentum” in the Hong Kong market, and for this reason stamp duties for apartments would be increased across the board for most buyers.
Mr. Tsang said the measures were needed to keep the potential economic risk from spreading. “The risk of an asset bubble is increasing,” he said. “If we allow the bubble to grow, in the end it will affect the macroeconomy and also the stability of the financial system. It will be very damaging to society.”
For apartments costing less than 2 million Hong Kong dollars, or $258,000, the stamp duty of 100 dollars will now be 1.5 percent of the transaction price, while the stamp duty for other properties will be doubled to as much as 8.5 percent of the residential transaction price.
The increased stamp duties will not apply to Hong Kong residents buying residential property for the first time, and other limited exemptions are possible.
The government also said it would standardize the stamp duty program for nonresidential real estate like shops, factories, offices and parking spaces to avoid a flood of speculative money into these other categories.
The city’s low interest rates, tight housing supply and abundant liquidity contributed to a 2 percent increase in real estate prices in January, Mr. Tsang said. Residential property prices have risen 120 percent since 2008.
Meanwhile, the Hong Kong Monetary Authority, the city’s de facto central bank, issued mandatory guidelines to banks to tighten home loan approval criteria for all commercial and industrial real estate, including maximum loan-to-value ratios of mortgage loans. These ratios would be lowered 10 percentage points from existing applicable levels.
Some analysts expected the latest measures to help slow the rise in real estate prices, for now.
“There will be a big impact in the short term, the transactions will decrease, as well as speculation,” said Thomas Lam, director of research at Knight Frank. But the government “will do more if the property price continues to increase after three months.”
The government has been taking steps to cool the market since October 2009, including a 15 percent property tax for foreign buyers, mortgage restrictions and taxes on quick resales.
Also Friday, the Chinese National Bureau of Statistics released data indicating that new-home prices on the mainland rose an average of 0.8 percent in January from a year earlier, raising the possibly that Beijing might stiffen a three-year campaign to calm the market.
Compared with December, home prices in 70 major Chinese cities rose an average of 0.7 percent in January, after a 0.4 percent rise in December from the previous month, according to Reuters calculations.
On Wednesday, the Chinese cabinet repeated its intention to extend a pilot property-tax program to more cities and urged the local authorities again to put price-control targets on new homes, in a bid to calm real estate markets.
Article source: http://www.nytimes.com/2013/02/23/business/global/23iht-property23.html?partner=rss&emc=rss
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