Home owners will benefit from a new tax allowance of up to $100,000 a year to offset high mortgage interest payments, Mr Tsang announced. The concession will help more than 500,000 people struggling to pay for at least 380,000 properties. The unprecedented move surprised estate agencies. Shih Wing-ching, managing director of the Centaline Property Agency, said: 'Obviously, the Government wanted to soothe middle-class families as they are the most hard hit by the economic turmoil. In a less explicit way, it also helps counter the property slump.' Mr Shih said the move would also help achieve Tung Chee-hwa's aim of boosting home ownership to 70 per cent of the population by 2007. The concession came a year after Mr Tsang said 'it would be wrong' to create a general tax concession to cover investment in housing. But last night he said mortgage interest rates had now reached such abnormal levels that the relief was justified. Mr Tsang said he had been moved by families who invested a substantial part of their monthly incomes in buying new homes. He was also confident the concession would not fuel price increases or spark property speculation. The concession applies to people living in their own homes, whether first-time buyers or not. They will be entitled to maximum relief of $100,000 a year on the cost of borrowing and can claim the allowance in any five years. In moves to target speculators, Inland Revenue Commissioner Wong Ho-sang warned people who owned more than one property and applied for the exemption would be penalised. The President of the Society of Hong Kong Real Estate Agents, Tony Chan Tung-ngok, said owners of small to medium flats would benefit most. 'On a flat worth $1.4 million with a mortgage arrangement of 10.5 per cent for 15 years, the purchaser is paying $8,000 interest each month,' said Mr Chan. 'This will eat up all $100,000 each year.' Mr Chan claimed the move was designed to boost the flagging property market. 'It is clear that if you have got a flat, you will benefit. If you don't, you won't. So people are being encouraged to buy,' he said. The concession was also a timely boost for the 125,000 families to whom the Government wanted to sell their public housing estates flats at knockdown prices. As a result, Mr Chan expected property prices to rise by at least 10 per cent within the next three months.