FS announces property market measures
October 26, 2012
Financial Secretary John Tsang says the Government is introducing two measures to narrow the supply-demand gap in property, and contribute to the market's stable development.
Speaking at a press conference today, Mr Tsang said the first measure is to increase the Special Stamp Duty rate and extend its restriction period from two years to three. The duty payable for resale within six months will increase to 20%, and to 15% if the property is held for more than six months but not more than 12 months. It will rise to 10% if the property is held for more than 12 months but not more than 36 months.
He said the second measure is to introduce a Buyer's Stamp Duty. It is not applicable to Hong Kong Permanent Residents. Other buyers, including local and non-local companies, are required to pay the duty at 15% on top of the existing stamp duty. The Special Stamp Duty will also be charged on resale within three years.
“We are aware that the Buyer’s Stamp Duty will cause inconvenience to some non-local buyers. We hope they will understand this is an extraordinary measure introduced under exceptional circumstances. We shall consider withdrawing this measure when the market regains its balance.
“These two measures will go into effect after midnight tonight. Properties acquired today or before will not be affected. We shall introduce the necessary legislative amendments to the Legislative Council as soon as possible.”
Since the Special Stamp Duty was launched in November 2010, resale within 12 months has virtually disappeared. However, the number of transactions for resale between 12 to 24 months has increased from 83 cases in March this year to 218 cases in September. It seems possible the increasing property price has weakened the deterring effect of the duty, Mr Tsang said.
“The US Federal Reserve has extended its pledge to maintain an exceptionally low interest rate at least until mid-2015. I am concerned this may extend the investment horizon of short- term speculative activities.”
The number of residential property transactions taken up by non-local buyers has also gone up from 3.1% in 2008, to 4.5% in 2010, and 6.5% in 2011.
On the primary market, the corresponding figures are 5.7% in 2008, 13.7% in 2010, and 19.5% in 2011.
“These figures suggest we need to work on demand-side measures, in addition to the supply-side measures.”
Mr Tsang said the objective of the two new measures is to help alleviate demand for housing by according priority to meeting the needs of Hong Kong Permanent Residents, under the exceptional circumstances of an overheated property market with supply shortage.
He said the Government knows the core problem of Hong Kong’s property market is the lack of supply. With the efforts of recent years, the housing supply will increase in the coming three to four years.
“We shall continue to monitor the property market closely. If necessary, we shall introduce further measures to maintain the healthy and stable development of the market.”
Meanwhile, the Government will amend the Stamp Duty Ordinance to adjust duty rates and extend the coverage period in respect of the existing Special Stamp Duty, and introduce a Buyer's Stamp Duty on residential properties acquired by any person except a Hong Kong Permanent Resident.
