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Royal Institution of Chartered Surveyors Welcomes HK Property Market Cooling Measures
Chrissy Coleman
27 February 2013
The Royal Institution of Chartered Surveyors has welcomed the latest round of cooling measures on Hong Kong’s property market, introduced by the local government last week in a continuing bid to curb speculative activity in an overheated market. RICS said the new measures will enable “the property market to develop in a healthy manner and are a clear sign that the administration is determined to regulate the market" in a statement released on yesterday. Cooling measures The doubling of stamp duty on all properties, and increase of stamp duty rate to 1.5 per cent for properties under HK$2 million (approximately $257,900), are effective measures to curb demand from speculative buyers and dampen “unreasonable growth of home prices”, RICS said. Since first-time buyers and home owners trading up properties will be granted exemption, end-user home buyers will benefit, it added. Nevertheless, RICS noted the administration should note that factors such as the low-yield environment across global markets and excess liquidity in the market, coupled with potential asset appreciation, encourage investment in residential property. Newly introduced demand-side measures should only be implemented in the near-term. In the long-term, increase in residential flat supply shall be the prime factor to slow down growth in home prices, it said. Non-residential Meanwhile, the new stamp duty rates will also apply to non-residential properties whereas the stamp duty will be charged on a sale and purchase agreement. Hong Kong Monetary Authority is also lowering the applicable loan-to-value ratio limits for non-residential property mortgage loans - RICS expects this measure will stabilise selling prices of non-residential properties as the transaction costs of these properties increase. However, at the same time, RICS said the government should offer more sites for non-residential developments, so that enough office space can cater for the market’s needs to ease the upward pressure of non-residential property prices and rents. Stabilising the market RICS said that it agrees the new measures announced by the government and HKMA are clear signs that the government is willing to stabilise the residential property market by delaying the demand and synchronising with the supply - the market will see the peak of home supply in 2014 and 2015. The new measures will discourage turnover of both residential and non-residential properties and therefore lower the transaction volume in the market. Consequently property prices are still likely to surge. In addition to boosting supply, RICS called for corresponding policy measures, such as streamlining approval procedures to shorten development period, to meet with market demand.