www射-国产免费一级-欧美福利-亚洲成人福利-成人一区在线观看-亚州成人

Social costs of property price curbs are unaffordably high

Updated: 2013-05-21 06:59

By Ho Lok-sang(HK Edition)

  Print Mail Large Medium  Small 分享按鈕 0

Social costs of property price curbs are unaffordably high

Following Singapore's example, the Hong Kong SAR government started imposing a Special Stamp Duty (SSD) in September 2010. Initially SSD was charged as a levy of 5 percent to 15 percent on the resale price of residential property, depending on whether the resale was within the first or second year. Resales of units beyond the first two years were exempt. On Oct 26, 2012 the government announced, however, that SSD would be raised from 10 percent to 20 percent, and that housing units must be held for more than three years before being exempt from the SSD. Simultaneously, the government said it would levy a Buyer's Stamp Duty (BSD) at 15 percent on all purchases by non-Hong Kong residents and on corporations. Then on Feb 22 yet another severe measure was introduced. Regular stamp duties were doubled for any buyer other than a first-time home buyer or a homebuyer trading up and reselling his former unit.

The SAR government justified these "unusually severe measures" as being necessary in order to meet the needs of "unusually severe times". This article will analyze the results and implications of the measures.

The three extra stamp duties - SSD, BSD, and Double Stamp Duty - are aimed at reducing home prices and improving their affordability. In terms of reducing the price of homes, the effects should be clear; home prices will indeed be reduced. Given that in the short term, the supply of homes can be considered fixed, economics tells us that the market price will be what clears the market, or in other words, "what the market can carry". Since what the market can carry reflects the willingness of buyers to pay, to the extent that the stamp duties reflect a cost, the net price that buyers will pay will be the former price minus the expected stamp duty that must be paid. So, economics tells us that the price will be lowered by exactly the expected cost of the stamp duties.

But will the decrease in price caused by the three stamp duties actually improve the affordability of homes to homebuyers? The answer is positive. To the extent that speculative demand and investor demand are both reduced, and that overseas demand is also reduced, the price to be paid by homebuyers will indeed be reduced.

The increase in mortgage rates, which was engineered by the Hong Kong Monetary Authority, however, will not improve affordability at all. Any reduction in home price is entirely offset by the expected increase in interest payments.

Even though the "3D's" are all effective in reducing home prices and improving affordability, the social costs are too high. Here is why.

First is unfairness. I have previously argued that SSD is unfair to unfortunate people who have to sell their homes within the SSD-payable period. These unfortunate people could be in financial dire straits, but they have to bear the brunt of the tax through no fault of their own. Apart from the unfortunate ones who have to resell their units for one reason or another, people who work as brokers in the property agency business are suffering grave losses because the measures effectively destroy their livelihood. Transaction volume has declined dramatically to historical lows - even beating the record lows of the SARS period. From what we know, the main sellers of units were low-income homeowners in Kingswood Villas in Tin Shui Wai. Many of these sellers were selling at a loss.

Second is the potential risk of creating negative equity among homeowners. The 3D measures have effectively driven away speculators, investors, and even homebuyers who had wanted to trade up. Since trading up is never necessary and given that reselling a unit is so difficult, the likelihood is that homeowners would prefer to stay put. If only first-time buyers are left in the market, and they are buying with small down-payments, there will be considerable risk of them becoming negative-equity owners at the end of the day, when home prices continue to decline.

Third is damage to the economy. In a market that is almost entirely dependent on first-time homebuyers, home prices would inevitably decline. When home prices and volume decline investors will stay on the sidelines and the likelihood is that the declines will continue. A capital flight will follow, eroding the strength of the economy, and the revenue base of the government. I can safely predict that the government will run a sizable deficit in the current fiscal year.

The author is director of the Center for Public Policy Studies, at Lingnan University.

(HK Edition 05/21/2013 page1)

主站蜘蛛池模板: 8888奇米四色在线 | 国产亚洲片 | avtt天堂网永久资源手机版 | 日本美女视频韩国视频网站免费 | 亚洲欧美韩日 | 日本久久香蕉一本一道 | 三级精品在线观看 | 欧美兽皇video | 亚洲加勒比在线 | 九九免费精品视频在这里 | 免费久草 | 成人免费在线 | 日韩中文字幕在线观看视频 | 日本久草视频 | 亚洲综合色一区二区三区另类 | 免费黄色一级网站 | 91亚洲精品成人一区 | 成年人视频在线免费 | 在线欧美视频 | 中文字幕va一区二区三区 | 久久永久免费视频 | a欧美| 免费老外的毛片清高 | 一级精品视频 | 欧美性妇| 国产一区二区日韩欧美在线 | 久久精品视频免费看 | 国产美女精品视频 | 久久久亚洲国产精品主播 | 亚洲成年人在线观看 | 久草资源在线 | 自拍偷自拍亚洲精品10p | 国产美女无遮挡软件 | 国产精品久久在线观看 | 国产成人精品曰本亚洲 | 国产欧美综合一区二区 | 99精品一区二区免费视频 | 日韩午夜免费视频 | 久久狠狠色狠狠色综合 | 97se狠狠狠狠狠亚洲综合网 | 成人第一页 |