Everyone, it seems, hates the Hong Kong government’s new property stamp duty measures. Developers and their shareholders can’t be happy: their stock slid 4 or 5% yesterday. The spiky haired real estate agents, whose vast numbers are one of the main symptoms of the city’s real-estate disease, must be even more morose than usual if their commissions correlate at all with the share price of Midland Realty, down 14% or so.
The Big Lychee’s Anglophone economics sages come up with every objection imaginable – practical, technical, theoretical, moral and ideological. It can’t work, won’t work, shouldn’t work and maybe even mustn’t work, given the Hong Kong bureaucracy’s dismal record. (The South China Morning Post‘s are here and here, and this one’s free.)
Others are irate because they think the measures will indeed have an impact, and one they have bet big against. The humungous Hong Kong property thread on the AsiaXpat forum hosts several gung-ho real-estate bulls who are clearly incensed that the CY Leung administration is threatening the continued easy capital gains they felt were their due. One warns that the developers will want CY’s head (they have in fact hated him for years) and issues dire threats that government income from land sales and property transaction taxes will fall. Funny how people who have too many eggs in the real-estate basket can suddenly acquire a deep concern about government revenues.
The Standard finds an angry expat called William, who is angry that, having lived here since just 2009 (“Up to last week I believed I was from Hong Kong…”), he will have to stump up an extra 15% non-res stamp duty. He is being delivered from sinking his young family’s savings into the planet’s worst-value-for-money housing and should be grateful. (He calls this city ‘exciting for engineers’; a quick Google search suggests he may not be totally uninvolved with corporate white locusts Ove Arup, a construction company hurling your and my money down the toilet by building the Sir Donald Tsang Zhuhai/Macau Mega-Bridge. At least he styles himself ‘Mr’ not the ridiculous ‘Ir’. And tidy that apartment up.)
So absolutely everyone’s miffed?
Not at all. Reports on reaction in the Mainland vary. Some chatterers seem to resent yet another symbol of Hong Kong’s exceptionalism, while others are envious and wish their native Shanghai or Beijing could do something similar. (From a pan-China perspective, Hong Kong operates an extreme version of the hukou system that benefits selfish urban dwellers by binding migrant workers’ residency and welfare rights to native villages – a discriminatory method of exclusion deplored by folks like Amnesty International.)
And then there is the tiny matter of the Hong Kong people themselves. The ones I’ve talked to love the new stamp duties. It’s as if CY had walked up to them and given them a hug to let them know they weren’t forgotten. Whether it brings down prices in theory but not in practice, or in practice but not in theory, they’re happy. They mostly realize that policy options are limited; an immovable currency peg is being hit by an unstoppable flood of hot and often dirty money, making the city Asia’s second biggest recipient of offshore direct investment. What can you do? This is politics not economics (bar a dash of psychology to try to deflate a bubble to keep it what officials call ‘healthy’ – that is, keeping their personal portfolios in positive equity). So you go for something rough-and-ready, something populist, something that pisses off all the right interest groups, with a hint of more to come. If the people like it, it worked.