Property analysts were surprised by the announcement yesterday of a 15 per cent additional stamp duty on corporate and non-permanent-resident buyers of homes in Hong Kong. They said the levy would drive down sales volume and home prices.
Henderson Land Development and New World Development rushed their Yuen Long development The Reach on to the market immediately after Financial Secretary John Tsang Chun-wah announced new steps to cool property prices, including the stamp duty.
"Sales volume [in the overall market] will be hurt," said David Ng Ka-chun, head of China and Hong Kong research at Macquarie Capital Securities.
Ng said companies bought a significant proportion of properties in Hong Kong. At the Imperial Cullinan project in West Kowloon, for example, companies reportedly comprise about 40 per cent of buyers, he said.
In the first three quarters, buyers using company names accounted for 9.7 per cent of home sales, while mainlanders bought 42.3 per cent of new homes worth HK$12 million or more in the third quarter, according to Centaline Property Agency.
"New-home prices will come down faster than secondary market prices," Ng said.
In a research report released by Macquarie two weeks ago, he anticipated further tough measures would be launched and forecast home prices to fall 5 to 10 per cent over the next nine months.
Adrian Ngan, analyst at Citic Securities International, said developers would lower their prices for new flats following the introduction of the additional buyer's stamp duty. They would not cut prices immediately, but the impact would be seen in future launches.
Supply in the secondary market would drop sharply, but demand would not fall as much, said Alfred Lau, property analyst at Bank of Communications International.
Donald Choi Wun-hing, managing director at Nan Fung Development, said prices would not drop significantly, but the move would slow down sales.
Buggle Lau Ka-fai, chief analyst at Midland Realty, expects the number of home sales to fall to below 5,000 a month. That translates to a drop of more than 16 per cent from the first half of the year, when there was an average of 6,000 home sales a month.
As well as the 15 per cent stamp duty for corporate and non-local buyers, special stamp duties on quick resales introduced in November 2010 were extended. From today, they will apply to resales within three years of purchase, up from two years, and the rates will be higher. Duty of 20 per cent will be levied on both buyer and seller in deals transacted within six months of the original purchase.
Home prices have shown no sign of cooling despite a rise in the number of flats under construction to a six-year high for the first nine months of the year. At September 30, 16,100 were under construction, 56 per cent more than the total for the whole of last year, government figures show.
After rising for five consecutive weeks, the main barometer of house prices, the Centa-City Leading Index, reached a new high of 112.25 for the week ended October 21, corresponding to a 19.2 per cent rise in the average price of a home on the secondary market since the start of the year.