Hong Kong has axed three major property transaction taxes in a bid to revive its depressed housing market, Hong Kong Financial Secretary Paul Chan (陳茂波) said in his annual budget speech yesterday.
The territory is among the world’s least-affordable residential markets, but home prices retreated last year amid high interest rates and an economic slowdown in China.
Hong Kong immediately scrapped three types of stamp duty, reversing measures introduced more than a decade ago to rein in speculation fueled in part by mainland Chinese buyers, Chan said.
Photo: AFP
“After prudent consideration of the overall current situation, we decide to cancel all demand-side management measures for residential properties with immediate effect,” Chan told the legislature.
The canceled taxes include stamp duties — which were once as high as 15 percent — imposed on property buyers who are not Hong Kong permanent residents and on those purchasing a second home.
“No Special Stamp Duty, Buyer’s Stamp Duty or New Residential Stamp Duty needs to be paid for any residential property transactions starting from today,” Chan said.
“We consider that the relevant measures are no longer necessary amidst the current economic and market conditions,” he said, adding that residential market sentiment became “very cautious” since the middle of last year.
Hong Kong had already reduced stamp duty in October last year in a bid to revive the market, but the reception had been largely muted.
Prices for apartments fell 7 percent last year and transactions slid 5 percent to about 43,000.
The weak housing market has also hurt public finances, with the Hong Kong government heavily reliant on land sales for revenue, but only netting HK$19.4 billion (US$2.5 billion) last year.
Hong Kong recorded a HK$102 billion deficit in 2023-2024, with fiscal reserves falling to HK$733 billion due to “challenges posed by the epidemic and external environment,” Chan said.
Hong Kong’s economy is expected to grow 2.5 percent to 3.5 percent this year, Chan said, aided by factors such as an expected interest rate cut by the US Federal Reserve.
“Amid a complicated and ever-changing international environment ... more strenuous efforts are required to strengthen momentum of our economic recovery,” Chan said.
He also pledged about HK$1 billion for tourism development, including funds for “mega events,” and monthly fireworks and drone shows over Victoria Harbour.
Hong Kong last year had about 34 million visitor arrivals, down from record levels of 65 million in 2018.
The Hong Kong Monetary Authority also relaxed mortgage rules, allowing homebuyers to borrow more, and eased an income-related stress test.
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