Expect more property cooling measures in Hong Kong ... but don’t expect them to work, says JPMorgan
- To regain effectiveness, the government should raise the 15 per cent stamp duty or further restrict second-home buyers, says the US investment bank
- Many observers believe there is only answer to the problem – and it’s not further cooling measures
Hong Kong’s government will keep rolling out cooling measures designed to rein in skyrocketing property prices, even though they have a very limited effect, according to JPMorgan.
The American investment banking giant joined a growing chorus of bullish forecasts, predicting the city’s home prices will go up by another 5 per cent this year.
“Hong Kong government has a political responsibility to impose policy measures even if they are relatively ineffective,” said JPMorgan’s property team, led by Cusson Leung, in a recent report.
“The main objective of property measures is not the ultimate impact on prices but the government sending a proper signal to the market – to cool down sentiment – that it will not tolerate sustained increases in property prices.”
JPMorgan suggested that “to regain its effectiveness” the government should either increase the 15 per cent stamp duty or put further restrictions on non-Hong Kong buyers and those buying a second home. And the Hong Kong Monetary Authority, the city’s de facto central bank, could further increase the risk weight of the banks’ mortgage loan books to increase the costs of home financing, it said.