• Thu
  • Aug 21, 2014
  • Updated: 8:06am
NewsHong Kong
PROPERTY

Property agents march against cooling measures, stamp tax

PUBLISHED : Sunday, 07 July, 2013, 5:51pm
UPDATED : Monday, 08 July, 2013, 4:39am

Thousands of real estate agents took to Hong Kong’s streets Sunday in protest at government efforts to curb soaring property prices, saying new transaction taxes and other measures are threatening their business.

The alliance, supported by industry leaders Centaline Property Agency and Midland Realty as well as associations representing smaller agencies, called on the government to scrap the Special Stamp Duty and the Buyer Stamp Duty.

“There are 37,000 agents in Hong Kong and there were only 3,000 transactions last month,” said Raymond Ho, a spokesman for the rally organisers.

“The policies have frozen the market. A lot of small property agent firms will close in the future,” he told news agency AFP.

Organisers said 23,000 joined the rally while police put the turnout at 5,500. Protesters chanting slogans marched through Causeway Bay from Victoria Park before assembling at government headquarters at Tamar.

Home prices in the crowded city have risen by 120 per cent since 2008, and by more than 30 per cent from their previous peak in 1997.

A 900-square-foot apartment in the middle-market Tai Koo Shing estate sold for more than HK$10 million (US$1.29m) last year, after being priced at about HK$3 million in 2003.

Officials say the measures to cool the market, in the form of extra stamp duties on some purchases, are aimed at stemming short-term speculative inflows.

They have so far had little effect in driving down prices but sales have dropped off dramatically.

Agents said developers needed time to get used to the new rules. They said they expected sales to continue to be slow in the coming months. Sales of offices, shops and industrial properties have also declined.

Shih Wing-ching, co-founder of Centaline Property, who joined the rally, said the cooling measures hindered property owners from freely selling their investments since the stamp duties discourage potential buyers.

Ho said 90 per cent of property agents received no commissions last month and the number of transactions dropped by 70 per cent since the cooling measures were introduced.

Total property transactions, including residences, offices, shops and car parks, fell 12.7 per cent month on month in June to 4,616, according to Land Registry figures. The year-on-year decline was 45 per cent.

Housing minister Anthony Cheung Bing-leung stressed on Friday the measures were exceptional, in an apparent attempt to appease growing hostile sentiment from the business sector.

“We still feel that the market could be volatile, so we have to be very careful about any bubble risk,” Cheung told reporters. “These measures are exceptional measures under exceptional circumstances.”

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Giwaffe
Given the severe housing shortages in Hong Kong due to the inherent supply limitations, we can all share the burden and limit the number of properties each of us own. This will increase available supply by reducing demand and speculation.
Government policy can be designed to encourage this. Instead of prohibitive transaction costs through the special stamp duties, a more effective way to discourage speculation would be to increase the carrying cost of the speculative asset. For property, we could increase the tax on property. Currently, a property worth HKD 5 million pays approximately HKD 7000 to 8000 annually in government rates and rents—HK’s equivalent to tax on property—amounting to less than 0.16% a year. For comparison, the average tax on property in Canada, the US, and Europe range from 1.0 to 4.0%. If we were to apply these rates to the example HKD 5 million property, the annual tax on property would increase to HKD 50000 to 200000. To relieve the burden on self-occupiers, a tax rebate could be given.
With higher carrying costs, speculation is discouraged. In other words, the low carrying cost of property is making it a very attractive asset for speculation.
babyhenry
One of our most parasitic profession out in force. Can't wait to see tycoons on the streets complaining that they couldnt sell their overprice properties.
If HK's property correct back to reasonable levels (aka 50% MINIMUM) hopefully than HKies will have the guts to stick with it, unlike their spinless stand during the Tung administration. Complain about sky high property prices, than Tung did it pop the bubble, those who complain then complain about the gov't misleading them to buy property. Yet those who managed to buy a home at very reasonable prices during the Tung administration never make a sound. Just 8 years ago I could easily find a place to buy and call home for less than HKD 2 Million or less. Now even shoebox flats are going for 3 million.
aplucky1
feel so sorry for the greedy worthless agents, they are a BIG PART of the problem
donniemcm
Mr Shih doesn't have a real objective view on this by saying :the cooling measures hindered property owners from freely selling their investments since the stamp duties discourage potential buyers.
I think should be the other way : the high calling price from sellers hindered buyers from buying a place to live.
Just look at the Tai koo transaction mentioned in the article. It's more than 3 times it's value.
It's obvious nothing is done in the name of freeness.
The 3 years holdind period is nothing. It should be raise and the tax value scaled too.
 
 
 
 
 

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