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02/11/2010 - Hong Kong suspends property from investment residency plan  02/11/2010 - Hong Kong suspends property from investment residency plan

Hong Kong Chief Executive Donald Tsang has announced that the government will suspend investment in property as a way of gaining residency within the city and will introduce a 'rent to buy' housing plan as it takes further measures to cool its property market.

The residency scheme was originally set up to stimulate investment by foreigners in the city. Under the original guidelines, non-Hong Kong residents could obtain residency by investing in local assets including real estate.

"Despite the fact that real estate investments under the scheme in recent years have only represented about one percent of the total market turnover, the government, in view of public concern, has decided to temporarily remove real estate from the investment asset classes under the scheme," Tsang told law makers.

The announcement follows a series of measures introduced over the past year in an attempt to slow house price inflation - property prices in Hong Kong have risen by fifty percent since 2009.

The previous changes were introduced on August 13th 2010 and included raising down payments for mortgages on luxury and investment properties due to record low mortgage rates prompting a surge in the number of mainland Chinese investors.

The Hong Kong government also plans to increase its land supply to encourage over 61,000 new units to come to market over the next three to four years.

Tsang's policy speech comes at a time when the city's property prices are close to the levels seen before the 1997 Asian financial crisis, with average home prices up fifteen percent so far this year, on the back of a thirty percent increase in 2009.

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