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HONG KONG : Hong Kong property consultants said the government's move to raise transaction taxes for luxury apartments will do little to stabilise residential prices.
However, they said plans to increase residential land supply will help.
The measures were announced in the government's Budget speech on Wednesday, and are aimed at averting a property bubble in the territory.
Hong Kong's Financial Secretary John Tsang has warned of an increased risk of a bubble forming in the local property market.
In his budget address Wednesday, Tsang said inflows of more than US$82 billion have flooded Hong Kong's asset markets since late 2008. And that has fuelled the rise in residential property prices, which soared by about 30 per cent in 2009.
To cool the market, the transaction tax for apartments worth more than US$2.6 million will be raised from the current 3.75 per cent of the transaction value to 4.25 per cent.
Consultants said this will not have much impact, as deals with that price tag only account for 2 per cent of total sales.
"After all, it's just a small amount to these people anyway. And if you are talking about the super-wealthy, high-net worth individuals, I think this amount is just negligible to them," said Marcos Chan, Greater PRD researcher at Jones Lang LaSalle.
Instead, experts said the government's budget pledge to tinker with its current land auction system is the right way to go.
"What the government can really do to help stabilise residential capital values is to lift the supply of residential sites," said Chan.
On Thursday, the government announced that six urban residential sites on its Land Application List will be put up for sale by auction or tender in the coming two years even if they have not been triggered. In the past, a land auction is triggered only if the site's reserve price is met.
"The step we have taken this time is to send a very clear signal - that the government reserves this flexibility and this initiative to introduce sites into the market when it is justified," said Carrie Lam, Hong Kong Secretary for Development.
In light of the stamp duty hike, a surge of new luxury apartments are expected to hit the market over the next few weeks. And analysts said developers will rush to sell off their properties before the new policy kicks in on April 1. - CNA /ls
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