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.
Hong Kong's secondary home prices continue to fall in wake of stamp duty change
Hong Kong's secondary home prices are continuing to fall as the government's anti-speculative stamp duties dampen interest.
According to Centaline Property Agency's secondary home price index, prices have been falling week on week since November 18.
The Centa-City Leading Index which tracks the prices at 100 housing estates across the city, closed at 114.38 for the week to December 2, representing a fall of 0.59 per cent week on week, or an accumulated drop of 2.08 per cent in the past three weeks. It hit a record high of 116.81 points for the week of November 11.
The index's benchmark of 100 reflects prices in July 1997.
On October 26, the government said non-permanent residents and corporate buyers would have to pay an extra 15 per cent stamp duty on home prices. The added duty, which took effect on October 27, came on top of other duties aimed at checking speculation.
The conditions in the market have not been reflected in the housing data announced by the government yesterday.
According to data released by the Rating and Valuation Department, the overall price index of private homes hit the highest point, 223.2, in October, a 2.62 per cent increase from September's 217.5.
Home prices grew 3.18 per cent between August and September.
The index uses the 1999 price level as the base point of 100.
"The figures have not yet reflected the market's condition after the new stamp duties," said Patrick Chow Moon-kit, the head of Ricacorp Properties' research department.
"We expect average prices will fall when the Rating and Valuation Department announces the November data in January," he said.
Meanwhile, members of the Real Estate Developers Association met Duncan Pescod, the permanent secretary for transport and housing, yesterday to express their concerns over the stamp duty.
Stewart Leung Chi-kin, chairman of Reda's executive committee, said the body was more concerned about the buyer's stamp duty than the special stamp duty, because the former would affect foreign investment and corporate buyers.