Hong Kong has axed three major property transaction taxes in a bid to revive its depressed housing market, finance minister Paul Chan said in his annual budget speech.
The finance hub is among the world's least affordable residential markets, but home prices retreated last year amid high interest rates and China's economic slowdown. Chan said Hong Kong immediately scrapped three types of stamp duty, reversing measures introduced more than a decade ago to rein in speculation fuelled in part by mainland Chinese buyers.
The cancelled 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.
Hong Kong had already reduced stamp duty last October in a bid to revive the market, but the reception had been largely muted. Flat prices fell seven percent during 2023 and transactions slid five percent, to around 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 ($2.5 billion) last year. Hong Kong recorded a HK$102 billion deficit in 2023-24, with fiscal reserves falling to HK$733 billion due to "challenges posed by the epidemic and external environment", Chan added. Hong Kong's economy is expected to grow between 2.5 and 3.5 percent this year, the finance chief said, aided by factors such as the US Federal Reserve's expected interest rate cut.
Hong Kong hopes to reboot its reputation as a finance capital following years of strict pandemic curbs and social unrest, with critics saying that Beijing's ongoing political crackdown on the city has led to an exodus of talent and capital.
Hong Kong last year saw 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.
