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.
Hong Kong home sales bounce back after dip following rise in stamp duty
Second-hand home purchases in Hong Kong's 50 housing estates rose by almost a third last week, after a decline over the previous four weeks. Data complied by the property agent Ricacorp Properties showed 147 flats registered during the week from November 12 to November 18, a 31 per cent rise on the 112 flats registered in the previous week. David Chan, a director of Ricacorp Properties, said: "Some home seekers decided to enter the market after flat owners agreed to cut prices."
On October 26 the government announced that non-permanent residents and buyers who use company names would have to pay an additional stamp duty of 15 per cent of the price. The extra tax came on top of increases in the stamp duty for flats resold before a qualifying period, which, in turn, was extended from two to three years, in an attempt to check speculation.
Chan said he expected more buyers would gradually enter the market, and he predicted that sales would soon increase to 150 deals a week.
In the luxury-home market, there were 2,966 new flats of 1,000 square feet or above registered in the first 10 months of this year, an increase of 11 per cent compared with the same period in 2011, according to Midland Realty.
However, the number of luxury home sales in the secondary market fell five per cent year-on-year to 3,299 transactions.
Midland Realty said the luxury home sales market would be adversely hit after the introduction of the new stamp duty.
Many luxury-home buyers are corporate buyers, making using company names, and thus hit by the new stamp duty, according to Vincent Chan Kwan-hing, chief executive of the residential department at Midland Holdings.