There were mixed reactions from analysts yesterday to the IMF's calls for an increase in stamp duty to cool Hong Kong's red-hot housing market. Some questioned the effectiveness of the proposal, and others warned that using administrative tools to reduce demand was not advisable for the market's healthy development. Lee Wee Liat, regional property head of Samsung Securities (Asia), said sales volume fell in May, June and July after the government raised stamp duty for property sales of more than HK$20 million to 4.25 per cent from 3.75 per cent in April. But activity recovered in August and September. In May, the first month after the increase in stamp duty, total sales of units worth more than HK$20 million were 197, down from 256 in April. Sales volumes were 123 and 184 in June and July, respectively, Lee said. 'As such, it is questionable whether it will be effective to raise stamp duty further. People will still buy even if you raise the transaction fee, if they have an expectation that property prices will rise by 10-15 per cent next year,' he said. Joseph Tsang, international director and head of capital markets at Jones Lang LaSalle in Hong Kong, said if a rise in stamp duty were 'huge' it might have some impact. 'But if the rise is going to be modest, then the chance of seeing a market turnaround is likely to be small,' he said. 'Market fundamentals are all there to facilitate further capital value growth - low interest rates, high money liquidity, inflation expectations, relatively strong economic growth, tight supply, weak Hong Kong dollar against other currencies ... all these will ensure strong end-user and investment demand and combined will be more than enough to offset negative impacts - if any - from a rise in stamp duty.' Xavier Wong, head of research for Greater China at Knight Frank, said while a further increase in the stamp duty on housing would dampen buying desire, he did not believe its impact would be strong enough to reverse price growth. 'It will cool short-term speculative buying,' he said. But most residential property buyers were long-term investors, he added. Alva To, head of consultancy for property advisers DTZ in Hong Kong, opposed the use of administrative measures to cool real demand. 'Any increase in stamp duty does not only hit speculators but also end-users in mass and luxury markets,' he said. Rather than raising stamp duty, he supported the idea of a profits tax or property trading tax for speculators who flip properties within a short period. At present, only the buyer of a property pays the stamp duty, not the seller. And even though the seller may be exposed to profits tax under the law, that tax is rarely imposed.