Hong Kong's battle to curb property prices still on after initial success
Unknown to most, proposed tax measures had quietly but steadily deflated the bubble that was threatening to push property prices to sky-high levels after Financial Secretary John Tsang Chun-wah's announcement to rein in the market.
Property prices had jumped 80 per cent in five years, making them the most expensive across the world.
Tomorrow will be exactly a year since Tsang's announcement of doubling the stamp duty for properties worth HK$2 million and above, and prices have dropped just 4.5 per cent from the peak in March last year.
Doubling the duty was the third tax introduced by the government in less than two years to cool the market. The first two were the buyers' stamp duty and a special stamp duty, both put in place in October 2012.
It penalises firms who acquire commercial property for self-use
"The measures to cool the market proved effective. Without doubt, the crazy rise in property prices would continue in the absence of a hefty increase in property tax," said John Siu, managing director of Cushman & Wakefield (Hong Kong). Raising transaction costs also stamped out the speculative fever for shops and car parking spaces, he said.