The lack of focus on real estate problems in the latest budget seems to have annoyed some Hong Kong citizens.
Hong Kong’s 2017-18 Budget revealed that the revenue from stamp duties has surged to HK$92.7 billion, 75% higher than the initial estimates. Despite the higher-than-expected income, Financial Secretary Paul Chan Mo-po said the government has no plans to reduce property cooling measures at the moment and has not given a timeline for that, as he fears cutting stamp duties would stimulate housing prices further.
However, some also see this as a sign that the government’s revenue would continue to remain dependent on sky-high land premiums.
The fact that the housing problems were addressed only a little in the budget has reportedly angered many citizens, who felt they have suffered enough from the world’s least affordable property prices and the government’s lukewarm response to address the issue.
Experts agree that simply keeping stamp duties at high levels is not the best option and believe there are other things the government could do to solve the housing issues in the city.
“The government rolled out similar cooling measures that targeted stamp duties in the past, but they were not very effective at all,” Michelle Kwok, senior associate director at Hong Kong-based Centaline Property Agency told Harbour Times in a phone interview.
“The housing prices remained high following the measures, and the reason is that demand of high-end Hong Kong flats still remains strong, especially from China and other international consortiums, mostly the ones from India and Indonesia,” Kwok added.
“Part of the reason is that a lot of people see Hong Kong as a nice and developed city with a free and transparent economy and a well-developed legal system, and that owning a real estate in the city, especially in high-end locations such as central or at the peak, is a symbol of power and wealth for them.”
“The best thing the government can do is to develop more housing sites in Kowloon and New Territories, or roll out other policies that target the young first-time home buyers. Providing liquidity at lower rates for those people would be very helpful, as down payments are always the major hurdles for them.”
On the other hand, the lack of tax breaks for tenants also frustrates home renters in the city. Chan said while the government was actively considering the idea, it is not ready to be included in the latest budget.
A tax break sounds nice on paper, but Kwok said renters should be careful about what they wish for.
“In theory it is a good idea, when you consider quite a lot of local people, especially the middle class, cannot afford to purchase private flats but at the same time are considered “too rich” to be qualified to apply for government sponsored flats and have to resort to living at rented flats. So it makes sense for them to want tax breaks for the rent,” Kwok said.
“But in reality, what would likely happen if the tax break did take place is that landlords would just raise the rents. The whole idea would just push rents up even higher, and honestly, I don’t see how that is helpful.”
Chan acknowledged the mixed opinion from the citizens. “No abundance of resources would ever enable the government to satisfy the needs of all,” said the financial chief in the budget speech, adding that he must be “proactive, innovative and bold in investing for the future of Hong Kong.”
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