Hong Kong has upped its cooling measures on their escalating property market.
Aiming to slowdown the market similar to Singapore, this densely populated bit of land has seen property prices increase by 364 percent over the last 14 years. The latest tactic from the Hong Kong Government is to introduce a 15 percent stamp duty. This is applicable to any first time buyer who is investing in more than one property at the same time.
The first round of cooling measures kicked in in November of last year. Stamp duty was hiked up but there was little effect on the market. This comes at a time when average house prices are at a level that are unaffordable to most.
This latest move is to deter first time buyers from purchasing more than one unit through the means of one legal document. A loophole that some investors were partaking in to avoid stamp duty on second homes. This has kept up demand and thus contributed to rising prices.
Property cooling measures have been put in place in a bid to detract international interest in one of the world’s most expensive property markets. Speculative buyers and investors are being targetted. The hope is to make property more affordable for residents. This comes at a time when many Mainland Chinese are snapping up property in Hong Kong in response to a weakening Yuan and restrictions that have been imposed on residents on the outward flow of capital.
Similar practices have been occurred in Singapore. Whilst it took a while for the 2011 measures to have an influence on the market, once they did the market completely slowed down. Only today is showing signs of a recovery with increased activity.
In Hong Kong the government have attempted to increase the supply of properties to help alleviate the situation. Over the next few years the number of new properties should exceed original estimates. The new cooling measures put in place should help those residents who want to buy property. Plus some also argue that it is sending a message to developers to not encourage the purchase of multiple properties in one transaction.
As the belts are being tightened in Hong Kong, investors are likely to look further afield. Recent property exhibitions in Hong Kong of property in Thailand have drawn in the crowds. And this interest is expected to continue as cooling measures are ramped up.