Monitor | Taxing foreign buyers failed in Singapore. It will fail in Hong Kong too
The government's new punitive measure on the property market will have an effect – it will lead to the demise of the city as a financial centre
Yesterday, this column argued that the Hong Kong government's punitive tax on non-residents who buy apartments in the city will do nothing to make the property market more affordable for locals.
Judging from the messages that cascaded into my e-mail inbox, the majority of readers disagree - vehemently.
So, in response to all the feedback, I'm going to amend my view. The government's punitive tax on non-resident buyers will do nothing to make the market more affordable for locals in the near term. In the long run, its effects will be wholly negative.
First, let's dispense with the notion, espoused by several readers as well as the government, that increasing the special stamp duty on property owners who sell within three years of buying will deter speculators and so bring down prices.
As Cusson Leung and Joyce Kwok at Credit Suisse pointed out in a research note published yesterday, raising special stamp duty rates will only backfire. Experience shows that sellers will just try to pass the extra cost on to buyers by demanding higher prices in compensation.