More land, more tax may curb prices, experts say
The government should hold regular land sales and increase stamp duty or profits tax on speculators' gains, property experts say. They were speaking after land sales on Tuesday produced winning bids well above the most optimistic estimates - showing government steps to cool the property market have not had the intended impact, they said.
That at least was the immediate view, but change may be on the way. Acting Financial Secretary Carrie Lam Cheng Yuet-ngor said the auction result reflected developers' views of the market and the value of land in certain areas - but she said next year's land application list would significantly increase land supply.
Ricky Poon Wai-ki, executive director of residential sales at Colliers International, said increasing stamp duty would raise the cost of property speculation. Duty on flats selling for more than HK$12 million could be raised by half a percentage point, to 4.25 per cent, he said.
'This would immediately reduce the number of short-term speculative activities ... as it would affect the profit margin of short-term investors. Thus, it would force them to switch to mid- and long-term investment which would slow down the rate at which prices are rising,' Poon said.
On April 1, stamp duty was raised to 4.25 per cent for flats costing more than HK$20 million.
At Tuesday's auction, Cheung Kong (Holdings) bought sites for luxury flats in Ho Man Tin and Hung Hom for HK$7.61 billion - more than 20 per cent above expectations.
On Friday, the government announced the latest in a series of steps designed to cool the property market - prices have risen 10 per cent in eight months, according to Poon.
The main points were the banning of the resale of uncompleted new flats, more sites to be auctioned and the ceiling for mortgages on luxury flats has been lowered to 60 per cent of the purchase price.
Both Poon and Professor Eddie Hui Chi-man, of the Polytechnic University's building and real estate department, said the government should resume regular land sales and review the land application list system. Under the list system, a site is auctioned if a developer bids enough to trigger a sale.
'It may also tax investors more for the profit they make in speculative activities,' Hui said.