* New World slides 7 pct, property agent Midland plunges 14
* Number of second-hand buyers fall 40 pct at weekend
* Curbs seen cooling demand; may not lead to big price
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By Clement Tan and Alison Leung
HONG KONG, Oct 29 Hong Kong real estate stocks
sank on Monday as investors locked in profits in the
outperforming sector on worries that surprisingly tough new
measures to cool soaring property prices will sap demand from
The falls come after the government, echoing similar moves
by Singapore, imposed a 15 percent tax on non-resident and
corporate property buyers and stiffened resale stamp duty fees
in the hope of calming prices, which have surpassed historical
highs hit in 1997.
Some property agents said the measures, which came into
effect on Saturday, had already had an impact.
"The number of second-hand buyers dropped 40 percent over
the weekend to the lowest this year," said Wong Leung Sing,
associate director of Centaline Property Agency.
The moves to cool speculation follow a series of currency
market interventions by Hong Kong's central bank to defend the
city's 29-year-old peg to the U.S. dollar as a third round of
quantitative easing by the U.S. Federal Reserve spurred capital
inflows to the former British territory.
Hot money flows have added to the attractive mix of low
interest rates, no capital gains tax and the stable exchange
rate to drive prices higher.
Hong Kong leader Leung Chun-ying, who was sworn in on July
1, has made affordable housing a focus for his administration in
a city with residential prices among the highest in the world,
fuelled in part by voracious demand from rich Chinese.
The runaway real estate market has created festering social
and political problems and forced the Hong Kong Monetary
Authority (HKMA) in September to curb home loans to borrowers
with more than one mortgage.
Shares of New World Development, which before
Monday had more than doubled so far this year, led the fall and
were down nearly 7 percent by midday.
Cheung Kong (Holdings) Ltd and Sun Hung Kai
Properties Ltd, Hong Kong's top two developers, each
fell more than 5 percent.
Property agent Midland Holdings Ltd plunged as
much as 16 percent, its largest single day fall in almost two
years, and was down more than 14 percent by midday.
The Hang Seng Property Index, a sub-index that
tracks the seven Hong Kong and two Chinese developer stocks that
are components of the Hang Seng Index, fell 4 percent,
lagging a 0.2 percent drop in the benchmark Hang Seng Index
"I think many are quite surprised by the severity of the 15
percent special duty, so many are taking profits on the sector,
which has done very well this year so far," said Jackson Wong,
vice-president for Tanrich Securities.
"It will probably reduce demand from the mainland by 15-20
percent, particularly for the high-end market."
Citigroup said the measures to contain home prices, which
rose about 20 percent in the first nine months of this year,
should be effective and that this would remove policy risk and
asset bubble concerns.
"We believe any dip in Hong Kong property stocks on Monday
would simply represent an enhanced buying opportunity," it said.
Despite Hong Kong's reputation as a city of skyscrapers,
luxury cars and swanky malls, around a tenth of families in the
city of seven million live in relative poverty, according to
Oxfam. The wealth gap stands now among the widest of any Asian
A series of cooling measures since 2009 have had little
impact on property prices and some analysts said that while the
latest steps were expected to hit demand they might not result
in a major adjustment in prices.
In December, Singapore imposed an additional 10 percent
stamp duty on foreign and corporate property buyers in a bid to
cool soaring prices.
(Additional reporting by Yimou Lee; Editing by Anne Marie
Roantree and Jacqueline Wong)