Hong Kong’s property market is one of the most expensive ones in the world – and there have been attempts to curb the price rises. However, they’ve not been very successful. Even the 15 per cent property tax on foreign buyers, mortgage restrictions and taxes on quick resales introduced in late 2012 did not stop the rent bubble and housing shortages.
Last Friday, the government announced the next step. Stamp duties on home and non-residential properties valued at more than HK$2 million are now doubled. Stamp duty on properties costing less than HK$2 million rose from a flat rate of HK$100 to 1.5 per cent of the transaction price.
The new rates do not apply to first-time buyers, people who do not own other homes, and those selling their only flat and buying a new one within six months – so clearly the aim is to hit spectators and foreigners.
Developers rushed to complete planned flat sales on Friday evening following the announcement of the new measures. They also looked for ways to fight the impact of sharp increases in stamp duties and increased the commission for agents – some of whom were passing on the increase to buyers to make up for the extra duty they will pay.
It is a crazy place – not only is land for development scarce in Hong Kong and it already houses the most sky scrapers in a city, but it is also the most expensive place to live in. Many businesses have found clever ways to pass on the extra increase through higher prices right to the end user and with a skewed tax system, it’s not the highest earners who pay the largest share of their income.