Hong Kong will slash stamp duties for property buyers to help boost its struggling real estate sector, while reducing levies on stock trades in a bid to kickstart economic activity in the Asian financial hub.
This is the first-time property cooling measures — in a variety of stamp duties known as “spicy policies” — will be relaxed effective Wednesday. They were first introduced in 2010 to curb red-hot property prices in a low interest rate environment.
“Over the past year, interest rates have risen significantly, various economies have shown moderated growth, and transactions of the local residential property market have declined alongside a downward adjustment of property prices,” Hong Kong Chief Executive John Lee said in his second annual policy address.
Hong Kong’s lukewarm post-Covid economic recovery has been accompanied by diminished stock trading volumes and sluggish residential transactional volumes in the territory’s once notoriously hot property sector. Home prices in Hong Kong fell four months in a row. The official housing price index stood at 339.2 in August, down 7.9% from a year earlier and 4.2% lower from April peaks.
Among levies relaxed: the stamp duty that non-permanent residents have to pay for property and another levy imposed on additional properties purchases by residents will each be halved to 7.5%.
Lee also announced a special stamp duty that was previously imposed on transactions involving property held for less than three years will now only apply to transactions for property held for less than two years. This levy amounts to 10% of the property price.
All stamp duties on property purchases will be suspended for new foreign talent, though that will be incumbent on the new residents obtaining permanent residency. Lee announced plans to reduce the stamp duty on stock transactions from the current 0.13% to 0.1% in a bid to boost trading volumes in Hong Kong, which have declined.
This reduction is part of several measures, including a review of stock trading spreads and market data prices to revive activity in one of Asia’s largest and most liquid stock markets.
