Top executives in Hong Kong property sector want stamp duties eased
Originally published at the South China Morning Post on December 10, 2015.
Top figures in Hong Kong's property sector have criticised government purchasing restrictions, calling for a review of current measures amid a plunge in home transactions in recent months.
Responding to Chief Executive Leung Chun-ying's declaration on Tuesday that the government would not loosen current restrictions to support prices, they said that the measures would leave the market vulnerable to shocks next year and have far-reaching consequences on the property sector as a whole.
Joseph Tsang, managing director of property consultancy Jones Lang LaSalle, said although the first half of this year saw decent transaction volumes, transactions declined starting from the third quarter to about 2,800 in November.
Average monthly sales volume in the second half of this year also dropped 36.5 per cent compared with last year, despite having risen 20.4 per cent in the first half.
"I'm afraid if the government won't do anything at all, it will be more or less the same as October and November for the whole of 2016," Tsang added.
He said the main problem with the government's restrictions was that they had prevented people from being able to borrow from banks.
"With all the cooling measures, the market probably will drop very seriously ... if there are unforeseen circumstances. It could be as high as 20 to 30 per cent."
The current special stamp duty in place to deter speculators and short-term reselling stands at 10 to 20 per cent of the sale price, depending on how fast the residence changes hands.
It was implemented in November 2010.
In 2012, the government also introduced the buyer's stamp duty, requiring non-locals and companies owned by foreigners or locals to pay an extra 15 per cent. Buyers who acquire more than one flat also have to pay double stamp duties.
"The government has no responsibility to guarantee that property prices will only go up, and not the other way round," Leung said before an Executive Council meeting on Tuesday.
"Our responsibility is to address the public's housing problem by increasing housing and land supply ... and to curb demand in three areas, namely investment demand, speculative demand and demand from outside of Hong Kong."
Shih Wing-ching, the founder and chairman of Hong Kong-based Centaline Property Agency, also disagreed with Leung's view and urged the government to reconsider its restrictions.
Shih said the special stamp duty should only apply for one year in order to stabilise rents and transactions, allowing owners to be able to sell their properties and in turn feed demand from buyers who need flats.
The buyer's stamp duty should also not apply to transactions above HK$20 million - since those would only affect the luxury sector, not the mass residential one - and the double stamp duty should not apply to commercial properties, he added.
"When the industry changes, the government has a responsibility to review its measures," Shih said. "When the market goes from a rise to a decline, isn't this a substantial change?
"Hong Kong is, after all, a free market economy."
This article appeared in the South China Morning Post print edition as: Industry figures want stamp duties eased