Hong Kong stamp duty

Cooling measures start to bite as homes market sees sharp sales drop

Government measures start to bite as property transactions fall by more than half last month from November and mainland buyers plummet

PUBLISHED : Tuesday, 29 January, 2013, 12:00am
UPDATED : Tuesday, 29 January, 2013, 5:11am

The number of new residential mortgage applications slumped 30 per cent last month from the previous month as the government's measures to cool the property market started to bite, the Hong Kong Monetary Authority said.

Buying interest from across the border dropped throughout Hong Kong, hit by the new stamp duty imposed on non-locals and companies who buy homes, with mainlanders accounting for just one in 15 transactions last month, down 40 per cent from November, data from the Centaline Property Agency showed.

Wong Leung-sing, head of research at Centaline, predicted that the number of mainlanders buying property will continue to fall over the next two months.

In a document circulated to Legislative Council members yesterday, the HKMA said there were 7,449 new residential mortgage applications in December, against 10,627 applications in November.

The number of property transactions last month fell 53 per cent month-on-month to 7,035.

On October 27 the government imposed a stamp duty of 15 per cent on non-locals and companies who buy homes. It also raised by 5 percentage points an across-the-board "special stamp duty" on resellers, to curb speculation, and extended its coverage from two to three years.

Duty of 10 to 20 per cent of the price is payable if the property is resold in that period.

In September the HKMA brought in measures to tighten mortgage lending, including cutting the mortgage-to-income ratio to 40 per cent from 50 per cent.

The average loan-to-value ratio for new mortgage loans declined from 64 per cent in September 2009 to 52 per cent in December 2012, the HKMA's report said.

The number of home mortgage holders in negative equity at the end of December fell to zero in the two consecutive quarters.

Despite a decline in sales volume and mortgage applications, home prices showed signs of rising.

The Centa-City Leading Index, which tracks the city's second-hand home prices, climbed to a record high of 118.38 on January 20. Wong predicted that the index would climb to 120 in the first quarter of this year.

Meanwhile, the MTR Corp said the tender for the 196,248 square foot site near the Tin Wing light-rail stop in Tin Shui Wai opened yesterday and will close on February 20.

Earlier, 16 developers submitted expressions of interest for the site, which can yield a total gross floor area of 982,271 square feet, of which more than 99 per cent is for housing.

Centaline forecast that the site will be sold for nearly HK$2.45 billion, or HK$2,500 per square foot based on gross floor area.