• Thu
  • Sep 18, 2014
  • Updated: 5:52pm
PropertyHong Kong & China
MARKETS

Hong Kong homebuyers warned 'don't rush into the market - it's heating up'

PUBLISHED : Monday, 21 July, 2014, 6:20am
UPDATED : Monday, 21 July, 2014, 1:54pm

The city's finance chief has warned prospective homebuyers to be aware of the market risks amid signs the lower end of the housing market is picking up.

Financial Secretary John Tsang Chun-wah said there were indications the market was "heating up", especially for low-cost homes - those in the region of HK$4 million. He was worried about buyers rushing in without considering long-term affordability and a potential rise in interest rates.

"I am particularly concerned about the buyers in this [low-cost] market," Tsang wrote in his weekly blog posting yesterday. "Once [the trend] in the property market starts to reverse, the ability of buyers to withstand [the impact] is generally quite weak."

Tsang urged homebuyers to keep an eye on prices and interest rates - and consider their own ability to buy - before they made the decision to enter the market.

His remarks came just days after lawmakers passed a bill to double the stamp duty on property purchases of HK$2 million or more, up to a ceiling of 8.5 per cent. Buyers have been paying the duty since February last year.

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Midland Holdings managing director Pierre Wong Tsz-wa said government cooling measures had raised transaction costs and the supply of low-cost homes had halved recently.

"But demand, most of which is coming from younger buyers in the first-time buyer market, usually doesn't fall in the summertime," Wong said. "Most have never bought a flat before and are entering the market, sometimes with the help of parents."

Tsang said seeing the stamp duty bill pass just before the Legislative Council summer recess had "taken a load off his mind". "The double stamp duty has effectively controlled property market risk … it has wide public recognition and, in Legco, bipartisan support," he said.

But Tsang said he opposed an amendment to the bill which was passed by lawmakers. It exempts from the double stamp duty public housing tenants who are not permanent residents and want to buy the flat they live in under the Tenants Purchase Scheme.

"The government does not agree with the amendment in principle as it only involves a few dozen non-permanent residents," Tsang wrote.

Democratic Party lawmaker Wu Chi-wai, who put forward the amendment, said double stamp duty would have a "huge impact" on these buyers.

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This article is now closed to comments

535aea67-f740-4042-ae89-35060a320969
4 million in the low cost region? where the hell did he get this idea? shows our financial secretary lives in another planet of Hk the rich and fat paid civil servant.
captam
@Tsang :
“Beware the Ides of March !"
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"Beware the Ides of June"
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"Beware the Ides of September".
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"Well, eventually !"
pure88
Yes, a crash is near. All the easy money has been made, and it is always the little guys that get hurt the most. They come like little lemmings in for the slaughter. The last one's in.
pragmatist
Oh well something to distract people with so that they do not probe other things....opium for the mind
Carparklee
Yeah, good warning. Perhaps, we are going to witness 5th wave of the property market. And soon we will witness the contrast of the peak and trough.
syn
More poo poo from the property, oops, I mean finance sector. I know one person who has been able to afford to purchase their own flat in the last 10 years without aid from an angel investor/parent. Wake up, these people are living in another dimension.
sunnymedina
Low cost homes 'in the 4 Million HKD region?'
Has HK gone crazy?
sipsip1238
You know what the great thing is about Tsang's comment, his view is that markets will go up, and given his EXCELLENT record of predicting what will happen, we're most likely going to see a crash.
So in a way, housing affordibility might come down after all.
pragmatist
Gambling continues in HK!
cliffrence
Double stamp duty where is this going? we bought a flat for our son to lived in and not to speculate, this is cruel enough for young people of HK, how on earth could they afford a home now.

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