China faces backlash from mainland, Hong Kong for relaxed property rules

Residents of Hong Kong will now be able to buy as many as two apartments, tax free, in nine cities in Guangdong province.
Residents of Hong Kong will now be able to buy as many as two apartments, tax free, in nine cities in Guangdong province.PHOTO: REUTERS

SHANGHAI (BLOOMBERG) - Beijing's new plan to use real estate rules to calm tensions in Hong Kong and forge a closer bond with mainland China is being met with scepticism on both sides.

The city's embattled Chief Executive Carrie Lam said last Thursday (Nov 7) that China had agreed to introduce 16 measures that will benefit Hong Kong and Macau residents under the Greater Bay Area integration programme.

The most eye-catching proposal is one that will make it easier for Hong Kongers to buy an apartment in nine cities in Guangdong province by exempting them from additional levies.

In Shenzhen, a city of about 12 million people that has some of the highest home prices in the nation, non-local Chinese residents have to pay five years of tax before purchasing a property, unless they have a residency permit.

Residents of Hong Kong will now be able to buy as many as two apartments, tax free.

The reaction was swift and blunt.

Mainland Chinese took to social media to complain about residential prices that are already too high and express anger that they're being treated as inferior.

"This rule will be challenged on the grounds of fairness," said Shenzhen-based property analyst Zhu Wence. "Residents feel they contribute to the city, pay loads of tax and bear more stringent property curbs."

In Hong Kong, meanwhile, users of an online forum that's become popular among protesters said they wouldn't want to move to mainland China anyway. There is simmering resentment towards Beijing for its anti-democratic policies.

 
 
 

The new measures come right in the thick of one of Hong Kong's worst political crises. A Hong Kong student died last Friday after a fall in a parking garage near a protest earlier in the week, a development that could inflame demonstrations planned for this weekend.

While often-violent protests are driven by demonstrators' frustration with the political system, sky-high property prices are also seen as a source of discontent.

Last month, the Hong Kong government unveiled plans to help first-time home buyers break into the world's least-affordable property market.

Existing home prices in Hong Kong rose for the week ended Nov 3 for the first time since August, a secondary private residential property index showed.