After wrapping up a four-day trip to Beijing on Thursday, Lee said his policy address would focus on increasing the city’s competitiveness, strengthening the economy and improving livelihoods.

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Policies to stimulate the economy are typically announced in the financial secretary’s budget address. But the government has faced mounting pressure from developers and the business sector to ease property market cooling measures amid an ongoing decline in transactions and a series of failed land purchase bids.

The city has recorded only 8,792 new home sales this year as of September, and is expected to see about 11,000 deals for the whole of 2023, according to major property agency Centaline. It said the figures were likely to be the second-lowest in nearly a decade.

Official lived-in home prices in August also marked four straight months of decline.

Non-first-time buyers also need to pay 15 per cent stamp duty, while non-locals or companies have to pay 30 per cent.

Economist Simon Lee Siu-po, an honorary fellow at Chinese University’s Asia-Pacific Institute of Business, said lowering property stamp duty would have a limited impact on the economy.

“The greatest problem that Hong Kong is facing is the outflow of capital and exodus of investors who had a confidence issue over the political outlook of the city amid concerns about its national security law,” he said.

“The government should not expect to drastically improve the property market by reducing or scrapping stamp duty. With the economy on a downward spiral, people will tighten their purse strings.”

Authorities were grappling with a dilemma over whether Hongkongers might feel it was more difficult to get on the property ladder if prices went up, while the government would suffer a drop in revenue from falling land sales and property transactions if they went down.

“Actually, the government should refrain from relying too much on land sales or property stamp duty as its main source of income. It should diversify its sources of revenue,” Lee said.

The insider said more measures were being finalised to improve the conditions of people living in subdivided homes. The policy address was expected to explore ways to speed up the creation of more “community living rooms” for children living in the subdivided flats, the source said.

The spaces provide residents additional room to do homework, shower, cook and eat.

Lee is also set to roll out new measures to address structural problems in the economy, which have been aggravated by an ageing population and sluggish diversification of activity.

“There will be new incentives to encourage couples to give birth, apart from strengthening existing policies on welfare and childcare services. It will be a highlight,” the source said.

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Political parties have floated proposals including giving cash incentives to parents with newborns. Government sources have not ruled out such measures.

The number of births in the city has been declining, with 32,600 recorded in the year to June, down from 35,100 over the preceding 12 months.

Hong Kong’s workforce will also fall from 3.82 million this year to 3.58 million, and account for 43 per cent of the population of 8.19 million by 2046. One in three people will be 65 or above by then.

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Paul Yip Siu-fai, chair professor in population health at the University of Hong Kong’s department of social work and administration, said the government should adopt a broader approach to encouraging childbirths, rather than relying on cash handouts.

“People’s reluctance to give birth is due to many factors, such as a lack of confidence in Hong Kong’s future, the housing problem and the education issue,” he said.

“If the authorities offer cash handouts, this will at least act as an indicator of their determination to tackle the low birth rate issue. This will be a good start but there should be a host of measures to encourage childbirth.”

The insider on Thursday said a series of new policies would also be announced to boost the city’s status as a regional innovation hub amid more sanctions by the United States against China.

The measures include attracting companies to conduct biomedical research by setting up a platform to share health data with mainland cities. The government aims to set up a drug approval authority in the long run and speed up the development of the third generation of semiconductors, according to the source.

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“These measures will benefit and speed up the development of the research hub at the Lok Ma Chau Loop and are likely to become a [key performance indicator] of the administration,” the insider said.

As part of a new drug approval process, authorities would ask pharmaceutical companies for only one registration certificate instead of two or more.

Lo said providing the city with a powerful body that could approve products for the market would also attract pharmaceutical firms that often carried out research where such a regulator was based.

Under Beijing’s latest blueprint for national development, Hong Kong should establish itself as a hub for innovation and technology.

The State Council also announced in August a blueprint for the Lok Ma Chau Loop developments, which analysts said was a move by Beijing to put pressure on the city and Shenzhen to speed up the cooperation at the site, where clusters of top laboratories and research institutes should be formed by the middle of the next decade.