In response to objections raised by real estate agents to the introduction of demand-side measures to control the property market, it was reiterated that the Government is acting in the overall interests of Hong Kong to maintain the stability of the financial system and macro economy.
While increasing housing land supply has also been a top policy priority, the Government has pointed to the "irrationally exuberant property market caused by the tight demand-supply balance, extremely low interest rates and abundant liquidity," that caused several rounds of demand-side management measures – the introduction of the Special Stamp Duty (SSD) in November 2010 and the Buyer's Stamp Duty (BSD) in October 2012, and the further hike in ad valorem stamp duty imposed in February this year.
Such measures were taken "to reduce the risk of a property bubble and prevent property prices from deviating further from the economic fundamentals … and the same time achieve the policy to accord priority to address the home ownership needs of Hong Kong permanent residents in the midst of the tight supply situation."
The Government believes, in fact, that the demand-side management measures have yielded notable results. Both speculative activities and purchases of residential properties by non-local individuals and non-local companies have diminished and stayed subdued since the respective introduction of the SSD and the BSD, and the property market has also cooled off since the announcement of the latest round of measures in February.
In fact, overall flat prices increased by on average 0.4 percent per month during March to July 2013, a notable deceleration from the monthly average increase of 2.7 percent in the first two months of 2013.
While the Government has continued to explain its position, and hopes that practitioners in the real estate sector can understand "the extraordinary measures (taken) in response to the exceptional market situation," it also stressed that it has been listening carefully to suggestions from various sectors (including amendments such as refining the BSD refund mechanism for redevelopment projects) and will work closely with the Legislative Council, so as to expedite the relevant legislative procedures.A comprehensive report in our Intelligence Report series dealing with the issues raised by international property investment, and the possible taxation implications raised by such purchases, with an account of the likely (and some less obvious) potential countries for your consideration, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report15.asp
TAGS: individuals | investment | real-estate investment | real-estate | stamp duty | Hong Kong | Expats
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