Hong Kong’s impending vacancy tax unlikely to derail new-found housing price momentum
- Legislative Council’s housing panel has started discussions on the vacancy tax proposal
- Move to impose vacancy tax on completed, unsold homes was introduced by Chief Executive Carrie Lam in June to curb runaway housing prices
The recent stock rally and US Federal Reserve’s dovish attitude on interest rates have muted the threat of the proposed vacancy tax in a bid to cool home prices by raising supply, say market watchers.
The introduction of vacancy tax came a step closer after the Legislative Council’s housing panel started discussions on the proposal on Monday.
According to the proposal, the Rating and Valuation Department will determine whether a developer needs to pay vacancy tax, which would be equivalent to double that of a flat’s estimated annual rental value at a designated date, based on the information it offers in the returns.
It comes nine months after Chief Executive Carrie Lam Cheng Yuet-ngor’s announced the levy to prevent developers from hoarding empty flats as the city struggles to increase housing supply in the world’s least affordable housing market.
Raymond Cheng, head of Hong Kong and China research and property at CGS-CIMB Securities, said the strong equity market and an unlikely increase in Fed interest rates for the rest of the year have boosted buying demand and lifted home prices recently.