PROPERTY NEWS: UK and HK put on the brakes
PROPERTY NEWS: UK and HK put on the brakes – New Straits Times
DAMPENER: A rise in buyers’ stamp duty in the UK and soon-to-be expected tightening measures in HK are a gloomy start to the new year for international investors
After reeling from the drastic increase in buyers’ stamp duty in Singapore since Jan 12, bad news for property investors continue to spread in other international property markets like the United Kingdom and Hong Kong.
In the UK, authorities have imposed a 3 per cent buyers’ stamp duty on the entire purchase price once it reaches £250,000 (RM1.25 million). Analysts in the UK criticised the move as coming at a time when the average cost of a property in England and Wales is expected to top £250,000 this year.
It effectively results in buyers having to pay triple the stamp duty once the price of their property is above that amount whereas they only have topay 1 per cent if the price is below £250,000. The 3 per cent is levied on the entire value of the home and not on a graduated scale.
“This would push up the total tax bill from £2,500 (RM12K) to £7,500 (RM36K), a massive jump in costs for home buyers. Overall, it could harm the recovery of the housing market, and thus the economy as a whole, because the price of homes will continue to bunch just below the £250,000 threshold, thus creating a distortion in the market,” an analyst was quoted to have said.
According to reports, the UK housing market is now at its healthiest since the financial crisis. Mortgage approvals for house purchases reached an 11-month peak in December 2012.
Existing home owners who do not buy any new property will also be hit with a new planning tax effective April if they extend their homes by more than 100 sq m (1,076 sq ft) beyond the original space. The Community Infrastructure Levy (CIL) could add tens of thousands of pounds to the cost of a basement, loft conversion or other extension.
Meanwhile, in Hong Kong, reports indicate that the Hong Kong Monetary Authority is poised to introduce its sixth round of mortgage tightening measures since 2009 after the last tightening measures did not cool the market. The authority views the overheating property market as the biggest risk factor to the stability of the Hong Kong economy. Prices are still inching up despite a fall in the number of sales and mortgage applications. Clearly, property prices have recovered from the introduction of a new buyers’ stamp duty in October 2012 and are now back at a record high, observed an analyst.
The rise is attributed to a lack of supply and continued overseas investment as well as low interest rates which are close to zero. Analysts are convinced that the interest rates can go up at any time.