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.
Agencies put expansion on hold as flat sales fall
Expansion plans on hold with transactions down by half since new stamp duties came in
A sharp decrease in home sales since the release last month of another round of measures aimed at cooling the the property market forced property agencies put their expansion plans on ice.
Research by agency Midland Realty showed home sales in the 10 major housing estates it monitors fell by 58 per cent to just 60 deals in the first 12 days after the government released the new tax measures on October 26, versus 142 deals recorded between October 15 and 26.
"The number of sales has decreased by 50 per cent so far. If the situation continues, property agencies will not be able to maintain their existing scale," said Willy Liu Wai-keung, chief executive at Ricacorp Properties.
Liu said the firm would put a temporary halt on new branch openings and staff hires. "But I think the current situation won't last long. We've seen an increase in potential buyers visiting flats over the last few days," he added.
Centaline Property Agency has taken the same steps in response to the sharp slowdown in sales so far this month. Louis Chan Wing-kit, managing director of the firm's housing department said no new staff were being hired and no new branches would be opened.
In a bid to compensate for the reticence of local homebuyers, Centaline would invite more mainland and foreign developers to sell their overseas residential projects in Hong Kong, Chan added.
Vincent Chan Kwan-hing, chief executive of the residential department at Midland Holdings, echoed these sentiments.
"During this period, we will monitor the market and review our plans," he said.
Hong Kong Property senior executive director Jeffrey Ng Chong-yip said the firm would also put expansion plans on hold.