Controversial property stamp duty bill moves one step closer to passage
Buyer's stamp duty likely to become law within days, but will it encourage sellers to cut prices and boost sluggish sales of second-hand flats?
The second-hand property market has hit its worst level since records began, property agents said as the Legislative Council passed the second reading of a bill to formally introduce the buyer's stamp duty.
The bill is expected to pass a third reading within days. A third reading would write into the statute books the 15 per cent tax on home purchases by corporations or by individuals who are not permanent residents.
Agencies are divided over the likely effect of the tax, introduced in 2012 to curb soaring prices, becoming law. Some believe its passage will remove uncertainty and encourage buyers who had hoped to see the tax overturned to cut prices, reviving sluggish sales. Others see months of slow sales continuing.
Midland Realty's chief analyst Buggle Lau Ka-fai said second-hand sales had remained below 3,000 for four consecutive months, a trend expected to continue for this month.
"Never have we seen so few transactions of second-hand flats for a prolonged period," Lau said. "That would be the worst since 1996, when property transactions were divided into new and second-hand categories."
"The passing of the bill will make little difference to the market," he said. As long as the duty remains, it will put a cap on demand, he added.
Louis Chan Wing-kit, managing director for residential sales at Centaline, sees things differently. He expects property prices to drop by 15 per cent when the bill becomes law, with transactions up by 20 to 30 per cent by June.
