Home prices expected to fall 5pc next month as stamp duty doubled

Home prices are expected to fall 5 per cent and sales volume plunge by half next month in response to the government's doubling of the stamp duty for those who buy second homes worth more than HK$2 million.

Centaline Property managing director Louis Chan Wing-kit said owners of flats worth more than HK$5 million would be hit hardest by the sharp increase in the stamp duty.

"Flat prices are heading for a 5 per cent correction. Transaction volumes will drop by half," he said.

The new stamp duty will also discourage many homeowners from upgrading to bigger flats, he said. That's because, under the new rules, homeowners are exempt from the new stamp duty only if they can sell their original home and buy a new flat within six months. But that may be too short a time to complete both transactions.

From today, the stamp duty on all properties - homes, offices, industrial units and shops - priced at HK$2 million or less will increase to 1.5 per cent of the transaction value, up from the previous fixed rate of HK$100.

For properties above HK$2 million, the stamp duty rate has doubled from 4.25 per cent to 8.5 per cent of the purchase price. But the revised stamp duty will not apply to local first-time homebuyers.

In addition, non-residential property buyers have to pay the stamp duty when the contract is signed.

The rise in stamp duties comes just four months after the government imposed a 15 per cent additional stamp duty on corporate and non-permanent-resident homebuyers.