Government measures to make housing in Hong Kong more affordable
Hong Kong is a country with a strong economy, which is developing at a rapid pace. It is no wonder that more and more investors pay attention to its real estate market. Housing in Hong Kong is the most expensive in the world. To buy an apartment here you have to pay at least 1.24 million dollars. Singapore is second in the list, followed by Shanghai.
The price growth tendencies for the real estate objects in this region will remain for the next year. But it is not only housing that is expensive in Hong Kong. The cost of living in a megapolis is also high. Here are high prices for food, public transport, training and rent.
The real estate market of the megalopolis is growing even despite the unstable political situation. During the current year the cost of living in residential and commercial segments increased by 21%. Such figures cause fears in the government, so measures were taken to cool the market. A 15% tax has been introduced for foreign individuals and companies who want to buy objects in the city. The stamp duty rate has increased when selling real estate that is sold earlier than 3 years after its purchase. Such innovations are explained by the Hong Kong government by the fact that last year about 20% of the objects in new buildings were purchased by non-residents, primarily by the Chinese. The authorities hope that the changes will help to regulate and slow down the price rise at the real estate market so that they become more affordable for local residents.
The government’s strategy led to a drop in a number of indices on stock exchanges, and some experts are sceptical about such measures. They believe that the introduced duties will have their effect, but it will be short-lived. In addition, the new restrictions will not make housing in Hong Kong more affordable for those who buy an apartment for the first time.
According to the analysis of the local real estate agency, a week after the new rules began to apply, the number of buyers of secondary fund objects decreased by 40%. Transactions of purchase and sale of new buildings are almost equal to zero.
Measures to cool down the market led to the fact that it just stopped. People do not know what to do next, and many are now afraid to buy housing so as not to lose money.
Specialists are sure that the introduction of new duties will significantly affect the elite real estate. Foreign investors will not want to buy objects if the market position is unstable, which will lead to a 15-20% drop in prices. But housing in Hong Kong for middle class people is likely not to change significantly. In the first six months after the innovations, the price may fall by about 9%, but then the figures will reach the current level. Commercial objects may become an alternative for investors.