Ads for property in Hong Kong. (Photo/CNS)
Housing prices in Taiwan, China and Hong Kong have soared in recent years due to excessive speculation and market manipulation, forcing governments to impose increasingly harsh measures to rein in real estate prices. Two years later, the measure has successfully changed the buying trend, but without solving the problem: the number of property transactions has gone significantly down, housing prices have not.
Following the end of the boom period in the property market, some investors in these three regions were even forced to sell their properties at below market prices.
As a free market economy, Hong Kong's real estate market has been impacted the most by this speculative manipulation. The latest poll conducted by Hong Kong media showed that most local residents complained of being unable to afford a house. Mainland Chinese investors who had once accounted for more than 40% of total transactions in Hong Kong's property market were blamed for driving up housing prices.
To curb speculation by foreign investors and to ensure stability in property prices in Hong Kong, the SAR government announced on Oct. 26 a future raise in the stamp duty imposed on short-term speculators, as property prices had overtaken even the record highs seen as far back as 1997.
It also introduced a 15% tax on foreign buyers in a bid to cool down the property market. The 15% rate applies to all non-Hong Kong permanent residents and companies.
After these measures were introduced, Hong Kong's housing market has been in a downward spiral, which is expected to continue until 2013. Mainland Chinese investors have also withdrawn from the market owing to the rebound in China's real estate market during the fourth quarter of 2012.
More investors have sold their properties at a loss, following the adoption of the recent property market measures by Hong Kong's government during the last two months.
A Hong Kong newspaper report said that a billionaire from Chongqing in southwestern China had sold a luxury house in Hong Kong for HK$134 million (US$17.3 million), representing a loss of HK$11.6 million (US$1.5 million) or a declining rate of 8%. This was being considered the largest fall in prices since the new measures were introduced.