Despite opposition from property developers, it appears the government is determined to press ahead with a new tax on vacant first-hand private residential properties.
I welcome the move, but that doesn’t necessarily mean I buy into the government’s notion that imposing vacant property tax on newly completed first-hand flats can substantially cool down the overheated property market.
The new tax is unlikely to deliver the desired results because, while it may be able to boost home supply, it still fails to address the fundamental issue of worsening home affordability in Hong Kong.
As a matter of fact, supply of private residential flats in the city is actually not as short as many people think.
That said, I believe the gap between soaring home prices and the actual buying power of the public would just continue to widen even if the government imposes a tax on vacant first-hand properties.
In my opinion, in order to truly get to the root of Hong Kong’s current housing issue, the government needs to come up with some more diversified and aggressive policy initiatives rather than just single-mindedly focusing on increasing home supply.
For example, the administration should consider extending the vacant property tax to the second-hand property market as well.
Only by introducing an across-the-board empty homes tax can the government truly release vacant properties in our city and substantially boost home supply.
Meanwhile, the government should also explore other options such as reintroducing tenancy control, and levying tax on hoarded land owned by property developers.
No matter what sort of new measures our decision-makers are going to adopt eventually, what is important is that the government should take the lead in facilitating in-depth public discussion about all the possible choices.
In particular, the administration must set a clear goal for itself: does it merely want to increase home supply just to allow more people to buy homes, or does it want to address the issue of overpricing in Hong Kong’s property market and narrowing the gap between home prices and people’s actual buying power?
This article appeared in the Hong Kong Economic Journal on June 26
Translation by Alan Lee
[Chinese version 中文版]
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