(Adds government, analyst quotes and share price rally)
* Home upgraders would have additional time to sell old property - government
* First easing of cooling measures since steps imposed October 2009
* Property registration in 2014 will raise by 10 pct thanks to easing - Midland Reality
By Yimou Lee
HONG KONG, May 13 (Reuters) - The Hong Kong government said on Tuesday it needs to keep the city’s property measures intact due to tight supply, although it proposed giving residents who wish to upgrade more time to sell their old homes in a bid to save on additional taxes.
The proposed scheme exempts residents who wish to upgrade their homes from paying stamp duty of as much as 8.5 percent if the old property is sold within six months of signing a formal agreement, rather than when the preliminary deal is agreed.
Such a move would mark the first easing of cooling measures imposed in the former British colony in February last year to rein in sky-high property prices after a series of other steps failed to have a sustained impact.
Hong Kong’s property prices have risen nearly 120 percent since 2008 on the city’s ultra-low interest rate environment, tight supply and abundant liquidity.
“We propose to relax the six-month limit for home buyers who are going to buy a home before they sell,” Chan Ka Keung, secretary for Financial Services and the Treasury, said after the stock market closed on Tuesday in a widely anticipated move.
He declined to give a time frame for the proposed scheme.
Hong Kong’s powerful property developers have been hit hard by a series of cooling measures imposed since October 2009, with many forced to cut prices in a bid to meet sales targets in one of the world’s most expensive real estate markets.
Speculation of the slight easing triggered a rally in Hong Kong property stocks on Monday that extended into Tuesday.
Shares of Cheung Kong Holdings, controlled by billionaire Li Ka-shing, closed up 1.5 percent on Tuesday, while New World Development gained 2 percent, Henderson Land rose 1.7 percent and Sun Hung Kai Properties Ltd was up 0.4 percent.
Analysts said the concession on double stamp duty would give upgraders an extra one to two months to sell their old property and could modestly boost new home sales in the city.
In anticipation of the move, the city’s leading property agency Midland Reality on Tuesday raised its forecast for new home registrations in 2014 by 10 percent to 13,000 transactions, expecting stronger demand for bigger apartments from upgraders following the easing policy.
“For the developers, it will be easier to sell bigger-size residential units ” said Thomas Lam, head of research in Greater China at Knight Frank. “It’s an extra opportunity for existing owners”
The Hong Kong government’s cooling measures have included a 15 percent property tax on foreign buyers, mortgage restrictions and taxes on quick resales.
No real impact had been seen until February 2013, when Hong Kong doubled stamp duties on residential transactions to as much as 8.5 percent of the sale to prick the city’s property bubble.
The number of properties sold in Hong Kong fell by more than a third last year to a 17-year low as a surge in sales tax turned off buyers.
However, steep discounts offered by developers have attracted some first-time buyers back to the market, with new home transactions rising 28.5 percent from a year earlier to HK$32 billion in the first quarter of 2014, according to Centaline Property Agency.
Additional reporting by Donny Kwok; Editing by Anne Marie Roantree and Matt Driskill