Hong Kong unveils more property cooling measures

Hong Kong introduced two new measures on Friday to stop speculative buying of homes from spreading to shops, offices, car parks and non-housing property after property prices recorded another increase recently.

“The property market stabilised for a while after October’s measures, but it has become upbeat again lately, with prices rising by 2 per cent in January,” Financial Secretary John Tsang Chun-wah said at a press conference, referring to last autumn’s raft of price-cooling measures.

The new provisions, which come into effect on Saturday, were a direct response to the renewed price increases, he said.

One measure is raising the stamp duty for purchases of all properties, including residential and non-residential. The rate for property worth up to HK$2 million will increase from HK$100 to 1.5 per cent of the property’s value.

The duty rates will be doubled for more expensive properties, going as high as 8.5 per cent of a property’s value, up from 4.25 per cent.

But buyers with a genuine need for housing – permanent Hong Kong residents who own no property – will be exempt from the duty increase.

The second measure requires the stamp duty for non-residential property to be paid at an earlier stage – when the purchase agreement is signed. This is aimed at curbing speculation in non-residential property such as shops, car parks, commercial offices and industrial premises, after their prices also rose recently.

In October, the government introduced a new buyer’s stamp duty on foreign and corporate buyers to cool the market.

Tsang said further new cooling measures would be introduced if the property market continued to rise.

Also on Friday, the Hong Kong Monetary Authority, the city’s de-facto central bank, announced tightening mortgage loans to contain risks facing by banks and lenders.

A person applying for a mortgage loan now has to pass a stress test showing his or her ability to meet payments if interest rates rise 3 per cent. This was raised from 2 per cent.

The mortgage-to-income ratio for loans to investors in commercial and industrial premises will also be lowered from 50 per cent to 40 per cent.

HKMA chief executive Norman Chan Tak-lam said the risks involved in the property market were now even higher than in 1997.

That year property prices fall sharply from record highs, leaving many borrowers finding it hard to pay their mortgage.