But developers warn that they may hurt genuine buyers

By Oswald ChenChina Daily

Chief Executive Donald Tsang said Friday he believes that the measures taken by the government last week to clamp down on property speculators are already having an effect.

Speaking at the Boao Youth Forum in the city, Tsang said the government will continue to monitor the local property market and vowed to introduce more measures to cool down the market if necessary.

But judging from the initial market response, he said that the measures have so far proved to be effective. Tsang also reiterated that the main purpose of last week’s move was to curb excessive speculation in the market that will severely affect property buyers and long-term investors.

The administration last week proclaimed that it would try to curtail the speculators by raising property transaction stamp duties and tightening down payment ratios for mortgage loan applications.

Meanwhile, the Real Estate Developers Association of Hong Kong, said that it is worried that the tough measures may have an adverse effect on genuine buyers.

Speaking after the association’s monthly meeting, Secretary General Louis Loong said that it was especially concerned about the new stamp duties.

If a property is resold within six months, the government will charge a levy of 15 percent of the transaction price that is jointly payable by both buyer and seller. It will impose a 10 percent charge on flats sold between six and 12 months of purchase, and 5 percent on those sold between 12 and 24 months.

Nevertheless, Loong said he understood why the government introduced the measures and admitted there was speculation in the property market.

However, he warned that prohibitive stamp duties could have a detrimental effect on genuine property buyers if they have to sell their homes within two years of buying them. He said there would be plenty of genuine reasons, such as financial difficulties, for example.

“We are worried as to whether the introduction of last week’s measures alone can rein in property speculation,” said Loong. “It has been the tight supply of land in the past few years as well as extremely low interest rates in the city that are the fundamental reasons for local property speculation.”

Statistics from local real estate firm 18 Property Agency released Friday showed that the number of property transactions has decreased drastically in some districts since the measures took effect on November 20.

“In the Olympic area district, property transactions of nine major apartments have fallen to eight from 30 cases during November 20 to November 26 on a weekly basis. Transaction cancellations amount to two cases, whereas there had been no such cases before the announcement,” said Arthur Tang, 18 Property Agency district manager for the West Kowloon Olympic district.

Centaline Property Agency Research Associate Director Wong Leung-sing told China Daily that the latest measures will lead to a short-term property price correction of 5 percent in the city.

“We expect property buyers will be cautious and will put up their properties for rental rather than sales, therefore depressing property prices up to 5 percent and hindering the rise of rent values in the short term,” Wong said.

Independent stock commentator David Webb also criticized the stamp duty measures on his personal website. He said they will act as a double tax as the government already charges profit taxes on property traders, just like any other business. Moreover, stamp duties will have a negative impact on liquidity in the local property market, he added.

H02| HK Business| By Oswald Chen