City Beat | With vacancy tax, will Hong Kong government be smiling when the dust settles on war with developers?

Amid runaway property prices, city faces dilemma in introducing any new levy which could spark political controversy and disrupt status quo

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Hong Kong’s red-hot property prices show no sign of cooling. Photo: David Wong

Published: 1:22pm, 10 Jun 2018Updated: 7:30pm, 11 Jun 2018

“The stairs are creaking but no one is coming down,” the Chinese saying goes, and that could have well described the long-talked-about property vacancy tax until, over the past week, action started speaking louder than words.

The government is now finally moving on it, but why the change of heart?

It started with Financial Secretary Paul Chan Mo-po telling lawmakers last week that the government was at the final stage of studying a vacancy tax on developers who hoard empty flats.

With official figures showing there are about 9,000 unsold flats across the city, speculation has been rife that the government finally means business, and now it seems to be very much the case.

It is understood the controversial new tax has got the final green light from Chief Executive Carrie Lam Cheng Yuet-ngor, who will announce it soon before July 1 to mark the first anniversary of her election win. An insider familiar with the study even suggested it could be next week before Lam’s Europe trip, if all the preparation work is ready.

Financial Secretary Paul Chan announced that officials were in the final stage of a vacancy tax push. Photo: K.Y. Cheng

Hong Kong’s soaring property prices no longer shock people, but there was still a jaw-dropping moment last week when a car parking space was sold for an astonishing HK$6 million (US$760,000).

Chan’s heads-up and Lam’s support have sent the latest signal that something needs to be fixed as the market keeps galloping onwards and upwards.

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