China: Hong Kong's Stamp Duty Hikes Were 'Essential'
23 August 2013
Posted by: Author: Mary Swire
Author: Mary Swire
The Government has confirmed that the increased cost of property transactions in Hong Kong, since the introduction of the Special Stamp Duty in November 2010 and the Buyer's Stamp Duty in October 2012, and the further measures taken in February this year, has succeeded in cooling the real estate market.
A Government statement has disclosed that both speculative activities and purchases of residential properties by non-local individuals and non-local companies have diminished and stayed subdued, and the property market has cooled off, since the announcement of the latest round of demand-side management measures.
With effect from February 23, 2013, the Government announced an increase to 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 (USD258,000) or below rose from a HKD100 flat fee to 1.5 percent of the transaction's value.
While overall flat prices increased by on average 0.3 percent per month during March to June 2013, that was a notable deceleration from the monthly average increase of 2.7 percent in the first two months of 2013.
While the Government has stressed that it is also determined to adopt a supply-led strategy as the basis to address the housing situation at source, it considers that the demand-side stamp duty measures "are essential to ensure the healthy and stable development of the property market and the overall macroeconomic and financial stability of Hong Kong under the current exceptional circumstances.”
The Government confirmed that it will continue to closely collaborate with the Legislative Council to ensure that these measures are implemented in a timely manner.