Source: Business Times, 25 Feb 2010

In fear of the repercussions of property bubble, Hong Kong’s government has made their move by increasing the stump tariff on luxury property sales with the aim to reduce the speculative atmosphere. Thus, transaction tax will be increased to 4.25 per cent on 1st April, on properties that worth more the HK$20 million. Furthermore, buyers are not allowed to postpone the payment of stamp duty on such transactions. To prevent excessive speculations, the transaction tax on property worth less than HK$20 million may also be raised. This is due to the fact that property prices are 8 per cent above their peaks before the recent financial crisis and some luxury-flat prices have returned to their peaks reached during the 1997 property boom.

Therefore, the government also plans to increase the supply of affordable flats and build several urban residential land sites for sale by auction or tender in the next two years. Such measures are quite similar to those introduced recently by Singapore to restrict excessive exuberance in the residential property market. More measures that are made by the Hong Kong government includes the reducing of loan-to-value limit on housing loans for properties worth HK$20 million or more to 60 per cent, from 70 per cent, and capped the maximum loan amount for cheaper properties at HK$12 million and to have stamp duty being charged to buyers who buy a residential property and sell it within a year.