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HK's 1st property tax eyes overseas buyers
Source: Bloomberg News |
October 27, 2012, Saturday
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HONG Kong's government yesterday announced its first property tax targeted at overseas buyers, stepping up efforts to cool home prices as US monetary easing and record-low interest rates raise the risk of a bubble.
Non-local buyers will have to pay a 15 percent tax upon purchase, Financial Secretary John Tsang said. The government also raised a resale tax on property by about 5 percentage points and extended the period during which it will apply to three years from two, he said.
Hong Kong is imposing its third set of property curbs in two months after home prices almost doubled over three years to become the world's most expensive. The city's banking authorities were forced to defend the currency's peg to the US dollar for the first time since 2009 this month as the Federal Reserve's third round of quantitative easing sparked an inflow of cash into the city.
"These measures will be effective in reducing the number of transactions, but ineffective in curbing the property prices," said Cusson Leung, a Hong Kong-based property analyst at Credit Suisse Group AG. "The non-local buyers' stamp duty is more of a stunt as it responds to Hong Kong homebuyers' demand to raise the barrier for foreign investors."
Record low mortgage rates, an influx of buyers from other parts of China and a lack of new supply have been underpinning the Hong Kong property market, prompting Chief Executive Leung Chun-ying, who was sworn in as the city's leader in July, to accelerate land sales and give preference to local buyers in some projects.
Property owners who sell their homes within six months of their purchase will need to pay a 20 percent special stamp duty, up from 15 percent, Tsang said. For resale between seven months and 12 months, the duty will increase to 15 percent, and transactions between 13 months and 36 months, the duty will be 10 percent.
"The current housing supply lags behind the soaring demand; we need to work on the demand-side measures," Tsang said. "These measures target property investors who resell the flats within three years, but not the genuine end-users."
Prices of small to medium-sized apartments have increased 21 percent this year, raising concerns about affordability, Tsang said.
Non-local buyers will have to pay a 15 percent tax upon purchase, Financial Secretary John Tsang said. The government also raised a resale tax on property by about 5 percentage points and extended the period during which it will apply to three years from two, he said.
Hong Kong is imposing its third set of property curbs in two months after home prices almost doubled over three years to become the world's most expensive. The city's banking authorities were forced to defend the currency's peg to the US dollar for the first time since 2009 this month as the Federal Reserve's third round of quantitative easing sparked an inflow of cash into the city.
"These measures will be effective in reducing the number of transactions, but ineffective in curbing the property prices," said Cusson Leung, a Hong Kong-based property analyst at Credit Suisse Group AG. "The non-local buyers' stamp duty is more of a stunt as it responds to Hong Kong homebuyers' demand to raise the barrier for foreign investors."
Record low mortgage rates, an influx of buyers from other parts of China and a lack of new supply have been underpinning the Hong Kong property market, prompting Chief Executive Leung Chun-ying, who was sworn in as the city's leader in July, to accelerate land sales and give preference to local buyers in some projects.
Property owners who sell their homes within six months of their purchase will need to pay a 20 percent special stamp duty, up from 15 percent, Tsang said. For resale between seven months and 12 months, the duty will increase to 15 percent, and transactions between 13 months and 36 months, the duty will be 10 percent.
"The current housing supply lags behind the soaring demand; we need to work on the demand-side measures," Tsang said. "These measures target property investors who resell the flats within three years, but not the genuine end-users."
Prices of small to medium-sized apartments have increased 21 percent this year, raising concerns about affordability, Tsang said.
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