Hong Kong is axing all extra stamp duties from Wednesday onwards in a bid to revive the city’s housing market, finance chief Paul Chan has said following pressure to lift long-standing property cooling measures.
“After prudent consideration of the overall current situation, we decide to cancel all demand side management measures for residential properties with immediate effect, that is, no Special Stamp Duty, Buyer’s Stamp Duty, or New Residential Stamp Duty needs to be paid for any residential property transactions starting from today,” Chan said in Cantonese as he delivered his annual Budget to the city’s legislature.
“We consider that the relevant measures are no longer necessary amidst the current economic and market conditions,” Chan added.
The move comes after a nine-month house price losing streak and mounting pressure to lift all property cooling measures. The government’s home price index fell for nine consecutive months to 306.4 in January, a 23 per cent drop from the peak in September 2021 according to official figures.
Since 2010, authorities have imposed extra stamp duties to curb property speculation and prevent home prices from soaring. Among them, a Special Stamp Duty was levied on properties resold within 24 months, a Buyer’s Stamp Duty on non-permanent residents and businesses, and a New Residential Stamp Duty on second-home buyers.
But the housing market has slumped over the past three years. Property sales plunged from around 74,000 units in 2021 to 43,002 last year, according to the Land Registry.
According to government figures, stamp duties brought in some HK$50 billion in revenue last year, a shortfall of HK$35 billion compared to the original estimate.
Demand for housing remained low, a government source told HKFP on Wednesday. In 2023, short-term transactions made up only 0.9 per cent of total residential property transactions, compared to 20 per cent before the introduction of the Special Stamp Duty, the source said.
Non-local individuals and businesses made up 0.8 per cent of total transactions in 2023, compared to 4.5 per cent prior to the Buyer’s Stamp Duty, he said.
Also in 2023, 97 per cent of buyers did not already own a property, compared to 75 per cent logged before the New Residential Stamp Duty was introduced, he added.
Chief Executive John Lee announced a partial easing of extra stamp duties during his second Policy Address last October. The period of the Special Stamp Duty – designed to combat speculation – was shortened from 36 to 24 months, meaning that only those who sell their property within two years after their purchase would have to pay the extra tax.
Stamp duty paid by second-home buyers and non-locals were also halved, down from a maximum 30 per cent to 15 per cent.
Following Lee’s Policy Address, property sales increased from 2,123 units in October to 3,477 units last month.
Hong Kong Budget 2024 in full:
- City expects HK$101.6 billion deficit as land sales revenue dip
- City’s economy grew by 3.2% last year, inflation ‘moderate’
- Finance chief asks for ‘understanding’ over lack of sweeteners
- Costly transport subsidy schemes face review amid HK$100 billion deficit
- Artificial islands project delayed, finance chief Paul Chan says, but will go ahead
- Tobacco tax rises for second consecutive year to put public off smoking
- Higher salaries tax rate for those earning over HK$5 million annually
- No consumption vouchers as relief measures scaled back
- City seeks to bring back 3% hotel tax to increase revenue
- Extra stamp duties axed in bid to revive housing market
- Over HK$1.1 billion to ‘soft sell’ city, inc. monthly drone and fireworks shows
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