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Hong Kong stamp duty

Hong Kong housing prices soar despite cooling steps

Kowloon apartment expected to fetch HK$220m despite government bid to cool property market

PUBLISHED : Wednesday, 05 December, 2012, 12:00am
UPDATED : Wednesday, 05 December, 2012, 10:30am

Fewer homes are being sold and mortgages taken out thanks to the government's housing measures, but the steps have not put the brakes on prices.

A potential buyer is in talks to purchase a 3,465 sq ft flat in The Arch development at Kowloon Station, said Centaline Property Agency, which is arranging the transaction. It declined to identify the potential buyer and said the price was still being negotiated, but talk in the market is that the sale price is about HK$220 million, or nearly HK$63,500 a square foot.

If the deal is sealed for that amount, it will set a new record in terms of price per square foot for apartments in Hong Kong.

"Some investors are willing to pay a premium for some unique properties, regardless of the concern over tougher regulations," said Jeff Chung, assistant sales manager of real-estate agent Hong Kong Property Services (Agency). "There is a very limited supply of units of more than 3,000 square feet in Kowloon."

Nevertheless, overall market sentiment remains weak, weighed down by the introduction of new stamp duties from October 27. The measures include a 15 per cent additional stamp duty on purchases by corporate and non-permanent-resident buyers.

The government also raised by five percentage points a special stamp duty on sellers that was 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.

There were 571 flats sold at 50 housing estates in November, the lowest monthly sales recorded so far this year, according to a survey conducted by real estate agent Ricacorp Properties. That is a drop of 53 per cent from October, when 1,210 flats changed hands.

Meanwhile, the number of mortgages registered for resale home purchases fell 32.5 per cent in the first 11 months of the year from the same period in 2011 to 81,766, according to mortgage broker mReferral.

mReferral chief economist Sharmaine Lau expects the higher stamp duties to continue to hit buyer sentiment, resulting in weak demand for mortgages.

However, mortgage applications for car parks skyrocketed last month.

Prior to the new stamp duties, applications for car-park mortgages usually accounted for 2 or 3 per cent of total mortgage transactions, Lau said. "Our preliminary figures show that car-park mortgage applications accounted for 24 per cent of total applications in November."

Looking ahead, property consultants Savills expects to see a moderation of price and rental growth across most real-estate sectors next year. "In the residential market, policy risk will remain as the government attempts to stabilise the sector before new supply comes on line from 2014 onwards," it said.