Why prices of Hong Kong homes will keep rising until sales are restricted to locals only
I refer to the letter from Patrick Mak (“Reclamation and protectionism can both be used to solve Hong Kong's housing shortage”, June 24), commenting on Timothy Cooper’s letter (“Hong Kong’s housing crisis has a quick solution: reclamation for the Eastern Lantau Metropolis”, June 19) and Michael Chugani’s column (“How Hong Kong’s housing crisis can be solved by thinking like Donald Trump”, June 13).
Home prices are determined by a combination of supply, demand, liquidity and expectation. Hong Kong’s former chief executive Leung Chun-ying put forward a suite of stamp duties on home purchase as “demand management” measures. The fact that home prices across the board keep breaking records shows clearly that such measures have failed.
I agree with Michael Chugani and Patrick Mak that restricting home purchase and resale of residential properties to permanent residents only is the most effective way to curb demand, pending the production of sufficient supply to redress the current imbalance.
As Mr Mak pointed out, cities in mainland China have already introduced such measures to ensure that priority is given to locals. Restrictions on home purchase, limiting sales to permanent residents exclusively, will not only demonstrate the government’s determination to look after locals first, but also curb market expectations that home prices can only go up.
Although the government insists that currently non-permanent residents and corporations account for no more than around 10 per cent of total transactions, the demand from wealthy people from the mainland will continue to be strong, as Hong Kong remains the most attractive city to live in for this group.
Furthermore, if the government’s efforts to attract more tech companies to Hong Kong for a public listing or technological development succeed, the external demand for Hong Kong’s homes is bound to rise.
Rather than introducing a vacancy tax, which is unlikely to have any significant impact on increasing supply, the government should follow the example of mainland cities and restrict home ownership, and resale, to permanent residents only.
Regina Ip, legislative councillor