OpinionProperty cooling measures shouldn't violate our free-market principles
Albert Cheng says the government's senseless actions are based on a wrong diagnosis; the problem is actually a shortage of public housing
Since the 2008 financial crisis, Hong Kong's residential property prices have almost doubled and are now ranked as the highest in the world. The main reasons have been the increased capital flows into Hong Kong as a result of global quantitative easing measures and the persistently low interest-rate environment.
Exacerbating the problem has been the rise in the value of the yuan against the Hong Kong dollar, prompting a seemingly endless flow of cash across the border, inundating the local property market and turning it into a heavily investment-oriented marketplace.
All these factors, plus the perennial local demand, created favourable conditions for prices to keep going up.
At the end of 2010, the previous administration implemented special stamp duties to curb rising prices. But they only had a temporary effect and, since the beginning of last year, house prices have again been on an upward trend.
After Leung Chun-ying took over as chief executive last July, his measures to curb prices have had the opposite effect and significantly boosted the prices of second-hand Home Ownership Scheme flats.
Last November, the government stepped up cooling measures by introducing a special stamp duty and a buyer's stamp duty. Then, in February, a double stamp duty was implemented on non-residential premises in a bid to curb prices in the commercial sector, including car parking spaces.