Hong Kong Luxury Property Prices Choked by Tightening

Luxury property prices in Hong Kong are the world highest due to government’s high stamp-duty and mortgage rules. Extra stamp duties and mortgage rules are progressive tax that require buyers to pay relatively high tax when they buy luxury properties. It strongly affect the market of property in Hong Kong– demand of those luxury houses is steadily decreasing.

The reason why Hong Kong government decided to double stamp-duty and mortgage rules is Chinese buyers. For a long time, Chinese buyers are the main force for luxury houses in Hong Kong. Government need to raise the prices to ensure the equilibrium inside the market. At the time Hong Kong government try to balance the market, parts of the demand is takes away.

In my personal opinion, luxury property market in Hong Kong will eventually gets to a balance. Decreasing of demand would lead to surplus within the market, which will eventually drop down the prices. Although Hong Kong government take actions to ensure the market is equilibrium, that approach is not perfect because Hong Kong citizens hurts at the same time. Instead of increasing tax, preventing Chinese buyers concur the market is a more reasonable approach.