Hong Kong property tax hits developers Shares in Hong Kong developers fell sharply on Monday after the government announced new taxes to curb speculation in one of the world's most expensive residential property markets. Cheung Kong Holdings, controlled by the family of billionaire Li Ka-shing, fell 4.7 per cent; Sun Hung Kai Properties, Asia's largest developer by market capitalisation, shed 5.1 per cent and Henderson Land Development sank 6.4 per cent. Midland Holdings, the territory's largest listed real estate agency, plunged 14.5 per cent. The benchmark Hang Seng index retreated 0.2 per cent while the property sub-index lost 3.7 per cent. The Hong Kong government on Friday said non-permanent residents and corporate buyers must pay a 15 per cent stamp duty, effective immediately - the first property tax to be targeted at non-local investors. The government also raised the stamp duty on the sale of property held by any owner for less than three years, in an effort to discourage short-term speculation. Andrew Lawrence, head of Asia property research at Barclays Capital, said the move showed the government was finally getting serious, and advised investors to sell property shares. Hong Kong's average home price is 17.6 times median household income, making the territory's housing market the world's least affordable, according to research by property consultancy Knight Frank. The rise has been fuelled by the government's failure to provide enough land for housing, and has been most notable in the market for small to medium-sized flats, where average prices climbed 21 per cent in the first nine months of this year. Demand has spiked in recent years because Hong Kong has become a favoured place for wealthy mainland Chinese to park their capital, which has caused tension between Hong Kong residents and their mainland neighbours. The Hong Kong currency, pegged to the US dollar, has lost around 6 per cent against the Chinese renminbi since the start of 2011 while mortgage rates are at a historic low. The government estimates that non-local buyers - mostly from mainland China - bought nearly a fifth of all new properties in Hong Kong last year, compared with 5.7 per cent in 2008. Chan Ka-keung, Hong Kong's secretary for financial services and the treasury, on Sunday said there were already signs that the measures were having an effect. Anecdotal reports from property agents indicated that the number of mainland Chinese buyers fell drastically at the weekend. Anthony Cheung, secretary for transport and housing, on Monday warned of similar measures in the commercial property sector if there were signs that it was being targeted by speculators. During his election campaign, Leung Chun-ying, Hong Kong's chief executive, pledged to make housing more affordable and promised to intervene in the free market if necessary to improve people's livelihood - a departure from Hong Kong's laisser-faire tradition.