The Hong Kong government should scrap measures designed to cool the city's surging property market and consider replacing special stamp duty with a capital gains tax, according to Jones Lang LaSalle, the world's second-biggest real estate agency.
The government's restrictive property measures have had a notable impact on transaction volumes but little effect on curbing price increases or addressing the shortage of supply in the residential property market, said Joseph Tsang, managing director in the firm's Hong Kong office.
"It's a good time to rescind the measures," he told reporters as the company released a report on the government policies it said compounded problems by reducing supply in the secondary market.
Tsang said the market would adjust if the US dollar strengthened and United States interest rates rose, adding that the market was already at or near its peak.
His view was echoed by Centaline Property Agency founder Shih Wing-ching.
"When rental yields decline and interest rates rise, prices will fall accordingly," Shih said yesterday according to Radio Television Hong Kong. Shih also called for the government to reconsider its cooling measures.
Jones Lang LaSalle said the government should consider replacing the special stamp duty that taxes property resales within three years with a capital gains tax. That would improve supply in the secondary market and limit the losses incurred by owners who are forced to sell their properties at a discount, he said, adding that the measure would still discourage speculation.
The government should also repeal other measures, such as double stamp duty, which doubles the stamp duty on residential and non-residential purchases of more than HK$2 million. Tsang also suggested abolishing buyer's stamp duty, the 15 per cent tax on purchases of property valued at more than HK$200 million by corporate buyers or non-permanent residents.
According to Jones Lang LaSalle, Hong Kong residential property prices have more than doubled in the four years since the global financial crisis struck.
The government has announced more than 30 policy measures since 2009 to cool the market. The measures discourage owners from selling and buyers from entering the market, according to Lau Chun-kong of Jones Lang LaSalle.
Tsang of Jones Lang LaSalle said real estate funds were discouraged from investing in Hong Kong because of rising transaction costs on residential and non-residential properties.
"Some clients have deferred plans to buy office premises for their own use," he said.