To avoid a real estate bubble, Hong Kong is pressing for higher stamp duties to restrict home loans, reported Reuters.
Across the country, officials decided to increase stamp duties to stabilize the housing market and overall financial system.
"The risk of an asset bubble is increasing," said John Tsang, the financial secretary, in an interview with Reuters. "If we allow the bubble to grow, in the end it will affect the macroeconomy and also the stability of the financial system. It will be very damaging to society."
The apartments going for less than HK$2 million, or $258,000, the stamp duty increases to 1.5 percent and other properties will range between 2 and 8.5 percent of the residential transaction price.
Hong Kong's Monetary Authority also enforced new stringent standards for home loans for commercial and industrial real estate. Some of the changes are to affect mortgage loans and its maximum loan-to-value rations, which would be reduced 10 points from previous levels.
According to Reuters, the costs of homes in 70 of China's cities increased 0.4 percent between November and December, and then increased to 0.7 percent between December and January. The Chinese government intends to expand a practice run of new property tax programs to even more cities. The stamp duties and implementations will hopefully stop the rise in January's two percent increase in real estate properties. The rise resulted from initially low interest rates, limited housing and excess liquidity, reported Reuters.
"It will help forestall any possible shift in exuberance from the residential market to the non-residential market by raising the costs," Tsang said.
However, some are avoiding paying stamp duties put on residential real estates. Cheung Kong Holdings sold 360 hotel suites through a legal loophole.
Since 2009, Hong Kong has added a 15 percent property tax on foreign buyers, restrictions on mortgages and taxes on quick resales, according to Reuters, to control prices for the sake of their real estate market.
