Monitor | Early signs suggest new stamp duties haven't reined in prices
While sales have slumped in the wake of the levy, strong interest from wealthy locals in buying second flats has helped support home prices
At the end of October, the Hong Kong government slapped a punitive 15 per cent stamp duty on all non-resident and corporate buyers of residential properties in an attempt to make homes in the city more affordable for locals. More than two months later, we are beginning to get a taste of how the policy is working.
Clearly the new stamp duty, introduced at the same time as tax rates on quick sales were jacked up, is having an appreciable effect.
We can see that simply by looking at transaction volumes in the residential market. In November, immediately after the new duty's introduction, sales fell by almost 20 per cent compared with the month before. In December, they slumped another 50 per cent.
No doubt some of this fall was because of seasonal factors. December is seldom a great month for home sales. But transaction volumes last month were also down by 24 per cent compared with December 2011, which suggests the punitive tax rates are indeed deterring some would-be buyers.
What's more, although sales dropped across the board, the greatest falls took place at the pricier end of the market among flats worth HK$5 million or more. And November's numbers indicate that the slide in volumes was concentrated disproportionately in the primary market.