Hong Kong Stamp Duty Hikes Cut Property SalesThe increased cost of property transactions in Hong Kong, after the hike in stamp duties introduced by the Government early last year, appears to have succeeded in cooling the real estate market by significantly reducing the number of property purchases.
The number of sale and purchase agreements for all building units received for registration for 2013 was 70,503, down by 39 percent compared with 2012 and by 35.2 percent compared with 2011. The total consideration for these agreements for 2013 was almost HKD456.3bn (USD58.9bn), a reduction of 30.2 percent compared with 2012 and 22.4 percent compared with 2011.
While Hong Kong's property prices are still reported to have grown in 2013, the rise of less than 3 percent is a marked slowdown. With prices now predicted to decline in 2014, particularly for luxury residential properties, the Government appears to have been successful in the further measures it took in February last year to address what was then an overheated property market.
By the beginning of last year, the Buyer's Stamp Duty and the increased Special Stamp Duty introduced in October 2012 had gone some way in driving down demand from those who were not Hong Kong permanent residents (HKPRs), but property market prices continued to rise.
The Government therefore decided, with effect from February 23, 2013, to increase the cost of property transactions generally by doubling the rates of existing ad valorem stamp duty applicable to both residential and non-residential properties, while stamp duty for transactions of HKD2m or below rose from a HKD100 flat fee to 1.5 percent of the transaction's value.
However, the new stamp duty rates do not apply to HKPR buyers who are not beneficial owners of any other residential property in Hong Kong at the time of acquisition of a residential property.
For further information please contact Kenneth Young, international contact partner for our firm in Hong Kong on
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