This interesting article appeared in the South China Morning Post on May 31, 2016.
Vancouver should look to Hong Kong for lessons in cooling property prices
(by Professor Richard Cullen, director of the tax law research programme in the Faculty of Law at the University of Hong Kong.
Richard Cullen says Hong Kong’s stamp duties have proved effective in reining in runaway prices, and other cities – particularly those struggling to cope with cashed-up Chinese buyers – could follow suit.
Below are his concluding paragraphs. Please visit the SCMP for the full article online.
…. A significant affordability problem remains in Hong Kong for first-time home buyers but the acceleration of that problem has been stopped and, now, in fact, residential property prices have retreated by 10-15 per cent. It is clear that the combination of special stamp duty, buyer’s stamp duty and double stamp duty has played a significant part in this outcome.
This policy approach has, so far, also reduced the “property bubble” aspect of price inflation in Hong Kong, without triggering a price collapse such as occurred so severely around late 1997.
All of these Hong Kong measures could be applied in Vancouver, with a realistic expectation that a measure of control could be achieved. At the same time, one could expect to see a significant swelling of public revenues, as has happened in Hong Kong.
Might such measures yet come to be applied in Vancouver? Don’t hold your breath: those doing very well from the prevailing system have long been keen financial supporters of the main political parties in British Columbia. (See CityHallWatch note.) This could explain why there has been so much hand-wringing over the problem in Vancouver across the past several decades – but so little action.
[CityHallWatch note: This includes kingpins of the development and real estate industry, including Condo King Bob Rennie, who donated $329,850 to the BC Liberals since 2005, and the real estate industry as a whole, which donated $12.8 million during that period.]