A study of the impact of property cooling measures on property purchase decision in Hong Kong

Abstract

Private property prices in Hong Kong have been on the rising trend fora prolonged period after economy recovery from the Asian Financial Crisis of 2008. Hong Kong’s externally oriented economy has been heavily influenced by global low interest environment and monetary easing policy of western countries which have made asset investment especially in property market the most profitable one. Under such circumstances, general people expected to have considerable asset appreciation in property investment, not to mention the vast capital flow brought by investors from the Mainland China and foreign countries. With growing number of property speculative activities, the government has perceived that there would be high risk of property price bubble if the overheated market is not under proper control. Therefore, the government has started to launch different types of property cooling measures from extra stamp duty to mortgage tightening measures since late 2009 and the progress was incremental, phase by phase and contingent on ever-changing market condition. With introduction of progressively stringent property cooling measures from time to time, only short-term property transfer transactions have been observed to be on downward trend but market response was always temporary and short term because general people believed that the housing supply was in acute shortfall. The government may not be aware that the property cooling measures have brought many side-effects or negative impact to general families making home purchase a very luxurious dream.