Hong Kong developers urge government to defer roll out of vacancy tax as they fear it will intensify market slowdown

By Sandy Li sandy.li@scmp.com / https://www.scmp.com/business/article/3027144/hong-kong-builders-urge-government-defer-roll-out-vacancy-tax-they-fear-it?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | September 17, 2019 4:08 AM SGT
Hong Kong developers have urged the government to consider a temporary suspension of the proposed vacancy tax, as they fear it would intensify the slowdown in the property market already reeling from the US-China trade war and social turmoil.
"The introduction of the vacancy tax at the moment certainly will add fuel to the fire," the Real Estate Developers Association of Hong Kong (Reda) said on Friday.
"The Hong Kong government forecast shows that the city's economy is undergoing adjustment. If the adjustment comes fast and sharp, it could trigger a domino effect on the economy ... it will hurt the stability of the financial system," Reda said.
The Hong Kong government said on Thursday that it would submit the The Rating (Amendment) Bill, better known as the vacancy tax bill, for vetting by lawmakers when they return to work in October after their summer break, with public consultation starting from Friday.
Also on Thursday, Beijing's mouthpiece People's Daily published a commentary urging the Hong Kong government to seize land being hoarded by the city's big developers. It said housing was an "important root cause" of young people taking to the streets in the anti-government protests that have rocked the city for months.
The association said the slowdown could also lead an increase in the number of negative equity owners as seen in 2003, which would not be good for Hong Kong.
Secondary home prices in the city have been declining since June after five months of increases this year. In June and July, used home prices dipped a combined 0.7 per cent, according to data from Rating and Valuation Department. Still, in the first seven months of the year, lived-in home prices rose 9.3 per cent.
The vacancy tax was announced in Chief Executive Carrie Lam Cheng Yuet-ngor's policy address last year and is seen as a populist measure in a city that struggles to provide affordable housing.
The government plans to bring the law into effect three months after the Legislative Council passes it, but the actual date is yet to be confirmed.
The Rating (Amendment)...