A year after the implementation of the special stamp duty (SSD) on residential properties at the point of resale, Financial Secretary John Tsang Chun-wah says the property market may have achieved a 'soft landing'.
Though second-hand deals are slow, quality new projects are selling well, such as The Wings in Tseung Kwan O by Sun Hung Kai Properties, and Festival City in Tai Wai by Cheung Kong.
Speaking in the Legislative Council, Tsang does not want to see home prices fall sharply. He says: 'Transactions have fallen a lot, though prices have not weakened to satisfaction. But this may be a soft landing in prices, which is not bad.'
The SSD is a hefty 15 per cent tax if buyers dispose of or transfer a property within 24 months from the date of acquisition. The impact of the tax in curbing short-term speculative activities has definitely been successful.
According to undersecretary for transport and housing Yau Shing-mu there were on average 85 subsale cases per month in the first 10 months of this year, compared to 320 subsale cases per month in the first 11 months of 2010. This is a fall of more than 70 per cent since the SSD implementation.
However, residential property transactions have dropped 34 per cent to about 75,000 in the first 10 months of 2011 compared to the same period last year. The second-hand residential property market registered about 67,000 transactions, a drop of about 34 per cent. The overall residential property price index showed an increase of about 13 per cent in the first nine months of this year. The index has been falling since June, and has dropped by 2 per cent in three months.
Patrick Chow Moon-kit, head of research at Ricacorp Properties, says the outcome has been different to what he expected.