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  • Dec 22, 2014
  • Updated: 7:51am
NewsHong Kong
PROPERTY

Flat buyers back off as tough new property tax hits home in Hong Kong

PUBLISHED : Sunday, 28 October, 2012, 12:00am
UPDATED : Thursday, 01 November, 2012, 5:14pm

A surprise property tax hit home as fast as it came - within 24 hours of the introduction of a higher stamp duty, people were shunning flat sales across the city.

Ministers rallied behind the tax and other new measures. They expressed confidence they would cool Hong Kong's super-hot property market; if not, they had plenty more initiatives "up their sleeves", one said.

The measures came into effect at midnight on Friday, just hours after Financial Secretary John Tsang Chun-wah had announced them.

He imposed a 15 per cent stamp duty on home purchases by non-permanent residents and companies, extended the special stamp duty on quick resales and raised the rates for the duty.

In less than six hours, buyers snapped up 100 flats at a Yuen Long development to beat the new stamp duty on buyers.

Secretary for Development Paul Chan Mo-po said on radio that the government needed to act swiftly. He dismissed concerns the measures would affect the city's competitiveness, saying they were aimed at tackling a fast inflow of hot money. "We have to react to the market. For things coming fast and fiercely, our measures have to be [launched] faster, more fiercely and accurately," Chan said.

The government raised by 5 percentage points the rate at which it levies the special stamp duty on sellers introduced two years ago to curb speculation, and extended its effect on resales from two to three years. The rates now range from 10 to 20 per cent.

On another radio show, Secretary for Transport and Housing Professor Anthony Cheung Bing-leung said that without new initiatives, the property bubble could burst, dealing a serious blow to livelihoods.

Chan expects prices to drop by10 to 20 per cent.

"Home buyer discouraged by new property tax" Video by Hedy Bok

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shafinhk
Why one would like top peg with you US dollars? when there are other reasonable options available? Hong Kong has nothing but free market. Foreign investors like it because we have simple and easy tax system. and very much tax free society. calling for this extra stamp duty for non-permanent resident may looks good to Hong Kong people but it is truly against the spirits of Hong Kong. i believe that by having this sudden China style policies which takes effect within hours would reduce foreign investors confidence. it was practice in china to change rules within a night NOT in Hong Kong.
Imagine what we will feel if Britain or other European countries would have such rules for Hong Kong residents. Hong Kong should learn from Singapore and should follow them as i believe they have the best system in force now.
ed_kwok
I applaud CY Leung for this clear declaration that Hong Kong's land is to be used and enjoyed by Hong Kong citizens. This policy is right and proper. I would increase the non-PR stamp duty to 50%. Foreigners who like Hong Kong enough to buy a property here are welcome to pay the tax or to demonstrate their commitment by working here for 7 years creating jobs, economic and social contribution. I am a property owner.
ricky11
Get rid of the interest rate peg! The US is in recession not us! If the HKMA has no monetary policy controls what is it that they really do? Apart from making sure the HKD falls between a narrow trading band their isn't much else they can do. Interest Rate Controls is key to tackling asset prices in any economy. We don't need a low interest rates in Hong Kong right now, all it's doing is fueling the property bubble that will invariably collapse sooner or later. One wonders what they do on 10 floors in the IFC, I bet they have awesome Christmas parties! Norman Chan, wake up!
oasis
It's against free market principles, however, these in extremis these principles would allow for free movement of migration as well, including the complete replacement of the Hong Kong population due to the price mechanisms.
Let's see how long this buying pause lasts for, and whether the panic to buy housing will relax any.
prctaxman
It is about time! A responsive, responsible HK government should have done this a couple of years ago. Alas, government in HK is not of, by or for the people. It never has been and I fear, never will be

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