The Unassuming Economist

From the IMF’s latest report on Hong Kong:

“During the last decade, Hong Kong SAR has experienced a large increase in house prices and credit, prompting the authorities to respond with several rounds of tightening macro-prudential rules and increasing stamp duty taxes. This chapter analyzes the effectiveness of these measures, and finds that they have helped reduce house price appreciation. The estimated impact of a 10 percent LTV tightening is a reduction of house prices of 4.8 percent over the next year. The estimated impact of a 1 percent increase in the ad valorem stamp duty tax is a reduction of house prices of 1.2 percent over the next year. Without these policies, house prices would have been 12.5 percent higher, and the mortgage credit-GDP ratio 15 percent higher.”