15 per cent stamp duty
To rein in the city's runaway housing prices, Hong Kong's Financial Secretary John Tsang Chun-wah announced an additional 15 per cent stamp duty on non-permanent-resident and corporate buyers starting from October 27, 2012. The move prompted speculation over the effectiveness of taxation on the real estate market and criticisms that Hong Kong was turning away from its roots as a free market economy in favour of a more protectionist market environment.
New residential stamp duty sends chill through mainland Chinese buyers
Real estate company survey finds new stamp duty prompts most mainlanders to take wait-and-see approach to buying Hong Kong flats
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Nearly two-thirds of mainland buyers will avoid Hong Kong homes - at least in the next six months, if not forever - now that the government has launched its latest cooling measures, a poll shows.
Of 229 mainland buyers property agency Midland China surveyed after the new levies were announced last Friday, 62 per cent would not consider buying a home in the city within half a year. A further 3 per cent said they would no longer consider buying a flat in Hong Kong.
However, the remaining 35 per cent would consider entering the market, depending on price movements, the poll found.
Meanwhile, i-Cable news reported last night that Cheung Kong (Holdings), the developer controlled by Li Ka-shing, is offering a discount of 15 per cent on its remaining new flats at Uptown in Yuen Long.
The discount will remove the burden imposed on buyers affected by a new buyer's stamp duty. Cheung Kong is the first developer to offer such an incentive.
"The buying attitude of mainlanders has changed drastically after Hong Kong imposed its latest austerity measures," said Samuel Wong, Midland China's chief operating officer and managing director for southern China.
"[The poll] shows Chinese buyers are now adopting a wait-and-see approach. Future price movements will become an important reference for them to decide whether to purchase flats in Hong Kong."
The realtor estimated the number of mainland buyers coming to view flats in the city plummeted 90 per cent after Financial Secretary John Tsang Chun-wah announced the measures. They include a 15 per cent buyer stamp duty on non-permanent residents and firms. The government also raised by five percentage points a special stamp duty on sellers introduced two years ago to curb speculation, and extended its effect on resales to three years. The rates now range from 10 to 20 per cent.
These measures came into effect at midnight last Friday, causing many mainland buyers to stay away in the last few days.
Property consultancy Colliers International's executive director of research and advisory, Simon Lo Wing-fai, expects the city's overall residential prices to fall 10 to 15 per cent in the next six months as a result of the new levies, while rents could edge down by 5 per cent.
"With the … stamp duty and revisions to the special stamp duty, short-term traders will be out of the market, and most non-local buyers are expected to stay on the sidelines," Lo said.
He expects a significant shift in capital to non-residential properties, such as offices and shops, unless the government implements similar measures in those sectors.
Additional reporting by Ray Chan