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Hong Kong's Property Purchases Drop After Stamp Duty Hike


10/05/2013

The increased cost of property transactions in Hong Kong, after the increase to stamp duties introduced by the Government earlier this year, appears to have succeeded in cooling the real estate market by significantly reducing the number of property purchases.

Hong Kong's Land Registry recorded 4,387 sale and purchase agreements for all building units in April 2013, down 35.9% on March, and 59% year-on-year; and the total consideration for those agreements stood at HKD31.9bn (USD4.1bn), a 28.3% decrease on March and 47.6% annually.

The public made less than 376,400 searches of land registers during the month, 6.7% down on March, and 9.3% less year-on-year.

By the beginning of this year, the Buyer's Stamp Duty and the increased Special Stamp Duty introduced in October last year had achieved their purpose in driving down demand from those who were not Hong Kong permanent residents (HKPRs), but prices in certain property market segments, particularly for medium-priced homes, continued to rise.

The Government therefore decided, with effect from February 23, 2013, to increase the cost of property transactions generally by doubling the rates of existing ad valorem stamp duty applicable to both residential and non-residential properties, while stamp duty for transactions of HKD2m or below rose from a HKD100 flat fee to 1.5% of the transaction's value.

However, the new stamp duty rates do not apply to HKPR buyers who are not beneficial owners of any other residential property in Hong Kong at the time of acquisition of a residential property.

www.lowtax.net



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