Buyers pay price of confusing property curbs

Hong Kong's famously "non-interventionist" government has intervened five times in the property market over the past five years to either raise or lower prices.

The government, of course, thinks it is being helpful and Financial Secretary John Tsang Chun-wah stressed that the new measures would not affect half of the local buyers. Presumably he also meant sellers, but he did not say this.

More fundamentally, Tsang only spoke of the direct impact of raising stamp duties on property transactions. He did not address the more general issue of the impact on prices - despite the fact the new stamp duties are designed to lower prices. And there's the rub: although the stamp duties are hefty they still represent a tiny part of overall property prices.

Local buyers are exempt from the tax if entering the market for the first time or trading the only property they own.

It is hard to see how this will reassure anyone contemplating entering the property market, assuming they even can after a decade in which residential prices have risen by 245 per cent according to Centaline's Centa-City Leading Index, a benchmark. Residential property rose 21 per cent last year, despite last October's imposition of a 15 per cent tax on purchases by foreigners.

Moreover, although this measure is designed to help "locals", only permanent residents qualify for exemptions, so those who have yet to attain this status will have to pay the higher duty. And this is also another tax on business because the exemptions only apply to residential properties.