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11


Emanuel Graça Editor-in-Chief


emanuel.graca@macaubusiness.com My kingdom for a house


THE LAW IMPOSING A NEW SPECIAL STAMP DUTY ON residential real estate transactions came into effect in the middle of last month. Deviating from standard procedure, the bill was approved by the Legislative Assembly in a single plenary meeting, following an urgent request by the government. Was such urgency really necessary? Will


the duty make it easier for Macau’s equivalent of America’s ‘Joe the Plumber’ to buy a home? It seems unlikely. It is hoped that the special stamp duty will help


Do we really want to live in a place where young professionals making an average income cannot own a home without first being subsidised by the government?


curb short-term property speculation, since it will increase transaction costs and make real estate a less attractive proposition. A duty of 20 percent is now charged on the resale of residential property within a year of it being purchased. The duty is only 10 percent if the resale takes place between one and two years after purchase. In Hong Kong, which announced a similar mea-


sure last November, the special stamp duty makes sense. At the time there was heavy speculation, as suggested by the 32 percent surge in the number of resales within two years of purchase, in the  rst nine months of last year, compared with the same period in 2009. It weighed on the mass market in Hong Kong.


Of cial  gures show that in the  rst half of last year 84 percent of resales within 12 months of purchase, were for properties valued at less than HK$3 million (US$375,000). We do not know if the government in Macau


just blindly followed Hong Kong or if there is a real need for a special stamp duty here. The secretary for transport and public works, Lau Si Io, did not provide detailed statistics to prove that speculators were impacting the market. The  rst set of data on property transactions that will reveal the increased duty’s effect will be available next month.


Stuck in the middle What we do know is that, just after the change was


announced on April 20, the real estate market cooled. However, that may have been more of a Pavlovian short-term reaction than a sustainable effect. The main problem is that the special stamp duty,


as with the other measures by the government to slow the real estate market, will have little effect on the price of property. At most, it may help slow the rise in prices, but what about those who have already been sidelined by the high price of real estate? While the government continues to focus on


curbing speculation, it does little to increase the supply of homes for the middle class. This should


be an obvious way to bring prices under control, not only by easing a shortage but also by introducing real competition among developers, obliging them to pare their margins. If we look at the market for new homes, most


projects in the pipeline are meant for the upper middle class or the rich, with apartments costing MOP5 mil- lion or more. Developers can set whatever prices they like, because there is still strong demand by investors here and abroad for high-end property. The government, as the only supplier of land and


the sole judge of how it should be used, could and should do something to correct these imbalances. In granting land to private developers its policy should favour those prepared to build homes for people to live in, rather than pro t from. This would mean squaring up to the real estate


lobby. As someone in the property sector once told me, dealing in real estate is really the only way for members of the local elite to tap into the economic boom and make a fast buck, since entering the casino industry is now a dream for most Macau kingpins.


Following blindly The closest the government has come to increasing


the supply of housing for the middle class has been to build more economic housing, a kind of social housing available for sale at subsidised prices. A bill revising the regulations for selling this housing category is now being discussed in the Legislative Assembly. The question is whether we want a city where


what divides the rich and poor is their ability to buy a home in the private market. Do we really want to live in a place where young


professionals making an average income cannot own a home without  rst being subsidised by the govern- ment?


Some will argue that this is what happens in Sin-


gapore. More than three-quarters of Singaporeans live in government-funded and managed housing estates. But Macau is not Singapore. Here, we have a long tradition of people turning to


the private market when they want to buy a home, with social housing aimed only at those on low incomes. And the quality of social housing in Macau is of a lower standard than in Singapore. Correcting the imbalances in Macau’s real estate


market will not be easy. But that does not mean the government should do nothing, or worse, that it should continue to copy blindly what governments elsewhere do, without making any effort to analyse and understand the peculiar dynamics of the real estate market here.


JULY 2011


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