The View | Hong Kong an outlier in making life easier for foreign homebuyers

Property markets are not just sensitive to movements in interest rates, they are also influenced by domestic politics and geopolitics. These days, it is rare that a government increases the incentive for foreign investors to purchase residential real estate, especially as deteriorating housing affordability is a hot-button issue.

Yet this was one step Hong Kong’s government took when it announced on February 28 that it was scrapping long-standing cooling measures to help arrest the decline in the city’s housing market. Additional stamp duties for non-permanent residents – which had already been halved to 7.5 per cent last October – were abolished with immediate effect, as were levies for those reselling their homes within two years.

The policy shift has already had a discernible impact. Last month, mainland Chinese buyers accounted for around 70 per cent of the primary sales of luxury properties worth HK$30 million (US$3.8 million) or more, up from less than 50 per cent before the cooling measures were jettisoned, according to data from JLL. The property adviser says non-local buyers stand to gain the most.

This is patently not the case in other leading housing markets. Knight Frank, which monitors changes in rules and regulations that have implications for wealth flows and property markets, says shifts in policy are the biggest risk for international buyers of prime residential real estate in major cities around the world.

Canada has unexpectedly emerged as one of the most strictest nations when it comes to foreign ownership of property. In February, the government extended a ban on non-resident purchases of residential real estate that was set to expire at the end of the year by an additional two years, amid signs the housing market has stabilised.