Hong Kong is to loosen mortgage rules and cut an alcohol tax in a series of measures seeking to support the flagging real-estate sector and boost spending, as China’s slowdown weighs on the territory’s economy.
Hong Kong Chief Executive John Lee (李家超) yesterday said he would raise the amount of loans homebuyers are allowed to borrow for some properties and broaden a residency-by-investment program.
The territory’s leader also announced a drastic cut to a tax on liquor, looking to boost a services sector struggling with fewer tourists and weak sentiment.
Photo: Bloomberg
“We must maintain our development momentum and self-renewal, and that we must embrace changes while staying principled, innovative and flexible in meeting challenges and opportunities,” Lee said in his annual policy address.
Lee set his sights on boosting the economy after cementing Beijing’s authority over the territory with a new national security law earlier this year, a move Western governments criticized for muzzling open discussion in the Asian finance hub.
The territory’s economy grew in the first six months within the official forecast range of 2.5 to 3.5 percent, thanks to strong exports that offset sluggish consumption, although China’s slowdown and geopolitical uncertainties have cast a cloud on Hong Kong’s growth outlook.
A focus of Lee’s speech was the ailing property sector, with home prices hovering near a 2016 low.
He said the maximum loan-to-value ratio for all homes would be set at 70 percent, allowing some homebuyers to fork out lower down payments.
The ratio is currently capped below that threshold for homes above HK$30 million (US$3.86 million) and 60 percent for those valued above HK$35 million.
A broadened investment migration program would include homes valued at HK$50 million or more as part of the required HK$30 million investment. Previously excluded, such property purchases would fulfill one-third of that requirement.
Thomas Chak (翟聰), head of capital markets and investment services at Colliers International, said the new home investment policy would help attract wealthy individuals to the territory and boost transaction volume in luxury properties, but would have a limited impact on the general residential market.
Hong Kong would also lower the amount of tax it levies on spirits to help the services and food industry, Lee said.
The duty for liquor with an import price of more than HK$200 would be lowered to 10 percent from 100 percent, with the lower rate applicable to the excess amount.
These sectors have struggled as sales and tourist arrivals remain below levels before the COVID-19 pandemic, with a wave of bankruptcies pointing to eroding business finances. That period saw the territory’s image take a hit from draconian quarantine measures and a crackdown on pro-democracy political opposition, including former media mogul Jimmy Lai (黎智英), whose national security trial resumes next month.
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