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Hong Kong stamp duty

Home sales in secondary market plunge after cooling measures

Plunge follows government's introduction last month of fresh measures to curb speculation

PUBLISHED : Wednesday, 07 November, 2012, 12:00am
UPDATED : Wednesday, 07 November, 2012, 3:16am

Secondary-market home sales plunged to an 18-week low last week in the wake of fresh anti-speculative measures unveiled by the government on October 26.

Data compiled by estate agency Ricacorp Properties shows that, in the 50 selected housing estates it monitors, 139 flats were sold in the week from October 29 to November 4, a drop of 40 per cent on the 229 homes sold the previous week.

"Zero transactions were recorded at eight housing estates," said Ricacorp director David Chan. They include the Tierra Verde and Villa Esplanada estates in Tsing Yi, and Fairview Park in Yuen Long.

On October 26, the government announced that non-residents and buyers who use company names to buy flats would have to pay a stamp duty of 15 per cent of the purchase price of the flats.

Effective on October 27, the extra tax came on top of increases also announced in the stamp duty payable on quick resales of flats, and the extension of that stamp duty to cover sales within three years, up from two years previously.

Nomura Equity Research said some initial reactions to the measures were emerging, citing Midland Realty's survey of 229 mainland buyers that showed that 62 per cent would not consider buying a flat in Hong Kong in the next six months.

Developer sales dropped a further 64 per cent week on week to 25 units last week, Nomura said, as buyers stayed on the sidelines waiting to see the market's reaction to the measures.

Though sales volumes were lower, prices in the secondary market rose 1.9 per cent week-on-week as measured by the Centa-City Leading Index, to 114.35, bringing the year-to-date gain to 19.8 per cent.

In some estates, record-breaking deals were reported.

In Nan Fung Sun Chuen, Quarry Bay, a buyer spent HK$4.65 million for a 474 sq ft apartment.

The price of HK$9,810 per square foot was the highest on record for a two-bedroom flat on the estate, according to Centaline Property Agency's sales manager Ron Yeung.

But Nomura said home prices were yet to reflect the impact of the government's measures.