HONG KONG: Thousands took to the streets earlier in Hong Kong this month to protest against the government's recent Hong Kong Property tax hikes.
Made up mainly of Hong Kong Property gents and disgruntled home-buyers, they are angry at the government for doubling the stamp duty on Hong Kong Property transactions since February to around 5.5 per cent.
Protest organiser Raymond Ho argued the cooling measures are hitting the innocent.
Ho said: "Some middle-class have a dream to live in one apartment and one for rent. They can handle their retirement if they have one flat for living and one for rent, but those stamp duty policies just freeze the volume of Hong Kong Property market and at the same time, freeze the social mobility of Hong Kong people."
Latest official data shows in the month of June, transactions in the city have fallen by 12.5 per cent, with fewer than 3,500 transactions completed. Total value of sales is down 22 per cent.
Hong Kong Property agent, Angus Or, has witnessed an even more drastic drop in transactions in the new town of Tseung Kwan O, built on reclaimed land along the bay, northeast of Hong Kong island.
His commission income has dropped by 70 per cent since the new levies were introduced.
"Usually in this area, there are about 600-700 transactions per month for buying and selling in total. Nowadays, there are only around 70 transactions for buying and selling alone," said Or.
Mass market estates, like Tseung Kwan O are in demand, because of tight supply in the market. Many home owners are now pulling back from selling their units.
Three years ago, a 684-square-foot apartment in the area cost around US$774,000. Today, the owner is asking for just over US$1 million.
"There has been no drop in prices. Most of the owners in this area have paid off their mortgages. When they bought the flat, it is only around HK$2 million and after 10 years, they have paid off their mortgages. They don't have a hurry to sell," explained Or.
Buyers, in the meantime, are in no hurry to commit either.
They anticipate prices to fall further down the road. The government has committed to significantly increase housing supply in the next three to five years. By then, the US Federal Reserve would have raised its benchmark interest rates. This means mortgage rates in Hong Kong will follow suit as the Hong Kong dollar is pegged to the US dollar.
Meantime, the pickings continue to be slim for agents like Angus.
And if the situation persists, industry insiders predict that up to two-thirds of Hong Kong Property gents in the territory could be out of work.
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