Hong Kong property

Data shows extra property stamp duty no brake on soaring prices, agents say

Property transactions subject to extra stamp duty hit record in August; agents say tax losing effectiveness

PUBLISHED : Tuesday, 12 September, 2017, 7:59am
UPDATED : Tuesday, 12 September, 2017, 7:59am

The number of transactions requiring home buyers to pay an extra stamp duty surged to a record high in August, suggesting the measure intended to cool the property market has been losing effectiveness, according to property agents.

The Inland Revenue Department said Monday that 3,411 residential transactions were required to pay an extra stamp duty during the month, exceeding the previous peak of 3,298 deals in March.

Income from buyers’ stamp duty and double stamp duty dropped 9.3 per cent to HK$1.94 billion last month from July, Inland Revenue said.

“It indicated the rising number of investors buying smaller flats rather than apartments involved in larger lump sum payments,” said Wong Leung-sing, associate director of research at Centaline Property Agency.

Over a thousand home seekers chase just four flats at Parc City in Tsuen Wan

Prices for small flats in the New Territories, or those below 430 square feet, jumped 19 per cent in July from a year ago, according to data from the Rating and Valuation Department.

“The rising number of deals needing to pay additional stamp duties showed that the introduction of the extra tax has failed to discourage investors’ buying fever,” he said

The number of deals subject to double stamp duty totalled 3,086 in August, up 7 per cent from July.

Revenue from the tax dropped 8.5 per cent to HK$1.31 billion in August, compared with HK$1.43 billion in July after hitting a high of HK$2.22 billion in June.

The number of deals subject to the buyers’ stamp rose to 325 in August, up 27 per cent from 256 in July.

Revenue from the tax totalled HK$630.2 million in August, a drop of 12 per cent on month, according to the data.

The government introduced a double stamp duty of as much as 8.5 per cent in February 2013 in an effort to tamp down speculation among buyers of second homes, or for purchases through a company.

In November 2016, the government raised the double stamp duty to 15 per cent for all residential purchases, except first-time buyers, as part of its campaign to dampen soaring home prices.