Concrete AnalysisHousing medicine not curing the problem
While the government has announced steps to ease housing shortages in the medium term, they are unlikely to cool prices in the near term
Hong Kong's housing sector seems to have developed a resistance to any medicine prescribed by the government.
Take the special stamp duty, for example. This punitive short-term trading tax was deemed to be a game changer. However, home prices have risen more than 20 per cent since its introduction.
Meanwhile, the government has prescribed a series of additional medicines, such as an increase in land supply, the removal of real estate from the list of permissible investment assets for the capital investment entrant scheme, the resumption of subsidised housing provision under the Home Ownership Scheme (HOS) and the exemption of premiums on resales of HOS flats to "sandwich class" families.
In addition, the Hong Kong Monetary Authority (HKMA) lowered mortgage loan ceilings a number of times.
But none of these measures has worked to curb rising prices, and with orthodox treatments failing the government is trying something unconventional: "Hong Kong property for Hong Kong residents only."
That may limit the choices available to mainlanders. But it does nothing to restrict their buying power, and hence this new initiative is not expected to work either in slowing down the market's growth momentum.