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.
Stamp duty 'a drag' on sales at luxury project
Marinella developer says new levy on buyers slowing purchases, calls for measure's review
Sales of the 20 remaining special flats at luxury residential project Marinella were slowing because of the new buyer's stamp duty, the developers said yesterday.
"The sales plan has been interrupted," Wilson Chan Yuk-sing, director of sales and marketing at K. Wah International, said.
Jointly developed by K. Wah, Sino Land and Nan Fung Development, Marinella, in Shum Wan, has 411 units. All, except nine penthouses and 11 garden houses between 2,661 and 5,173 square feet, have been sold.
"Originally we planned to start selling the special units around the time when the project was completed, because potential buyers would want to see the flats first," Chan said. "But because of the introduction of the new levy more than a month ago, we have had to adjust our plan."
The project is completed, and the developers are now handing flats over to buyers. They would offer viewings of the remaining units next year. Chan said the 20 special flats were worth about HK$2.5 billion in total.
The new buyer's stamp duty, introduced in late October to cool the property market, imposed a levy of 15 per cent of the price on non-permanent residents and corporate buyers.
Chan said the tax had affected sales and he hoped the government would review this measure in the first quarter of next year. But he expected buyers to return to the market gradually once sentiment improved. Nan Fung Development deputy general manager Raymond Lai Hok-leung said the new tax had affected end-users and investors.
Since the market is usually quiet during the festive season, he expected more buyers to return to the market after the Lunar New Year in February.
Credit Suisse research analyst Joyce Kwock said developers now needed more time to sell their flats.
Luxury home sales dropped 19.3 per cent month-on-month to 7,035 in November, according to Thomas Lam, director and head of research and consultancy for Greater China at property consultancy Knight Frank.
But owing to limited flat supply, a low unemployment rate and low inflation, Lam expected home prices to remain relatively stable next year, with movements of less than 5 per cent.
"As potential buyers who cannot afford the high prices or are waiting for a price drop are expected to shift towards the leasing market, home rents are expected to gain 10 to 15 per cent next year, with sustained supply and stable demand," he said.