Following a period of inactivity caused by the three-year Covid-19 pandemic, mainland Chinese buyers have now returned in strength to the Hong Kong property market.
Property agents that mainland Chinese buyers were now accounting for up to one-third of new property sales – with some buying as many as eight properties at once. The shift comes in the wake of the city’s elimination of all additional stamp duties on nonresident buyers.
The increased interest in Hong Kong also reflects a lack of confidence in the mainland’s housing market, stemming from China’s uncertain economic outlook.
In late February, Hong Kong abolished all additional stamp duties, including those for second property purchases, as well as duties on the sale of flats within two years of purchase. Nonresident buyers, who previously had to pay imposts as high as 30 percent, now face a tax rate of just 4.25 percent, equivalent to that of locals.
The decision to reverse government initiatives that aimed to cool housing prices during the last decade comes after Hong Kong’s housing prices plummeted by over 20 percent from their peak in 2021 – a decline attributed to higher mortgage rates and a bleak market outlook.
Despite the increase in sales, property prices remain depressed, with developers offering discounts to shift inventory. S&P Global Ratings predicts that transaction volumes in Hong Kong this year will only show a modest recovery from 2023 due to persistently high interest rates.
