Financial Secretary John Tsang (centre) announces measures to reduce the immediate demand for both residential and non-residential properties.
New measures to cool property market: FS
February 22, 2013
Two new measures to cool the property market will be introduced to reduce immediate demand, Financial Secretary John Tsang announced today.
At a press conference, Mr Tsang said the ad valorem stamp duties on both residential and non-residential properties would be doubled across the board. For transactions valued at $2 million or below, the stamp duty will rise from a $100 flat fee to 1.5% of the transaction's consideration.
“We shall grant exemptions similar to those available in the existing Special Stamp Duty and Buyer’s Stamp Duty regimes. The new stamp duty rates will not apply to Hong Kong Permanent Resident buyers who are not beneficial owners of any other residential property in Hong Kong at the time of acquisition of a residential property,” he said.
Under a new arrangement, Mr Tsang said stamp duty on a non-residential property will be charged on a sale and purchase agreement, instead of the current pratice of charging it when a conveyance on sale of the property is executed.
“I expect it will help forestall any possible shift in exuberance from the residential market to the non-residential market," he said, adding the two measures will take effect after midnight tonight. Sale and purchase agreements signed today or previously will not be affected.
In October last year, the Government introduced two new measures - increasing the Special Stamp Duty rate and extending its restriction period, and introducing the Buyer's Stamp Duty. Transactions in November and December 2012 plunged sharply as speculative activities and non-Hong Kong Permanent Residents' demand subsided.
The market regained momentum in January. Property prices rose 2% in January, and have continued to rise. Prices have increased 120% compared to 2008. The affordability ratio dropped to 52% in the fourth quarter last year, and this ratio would rise to 68% if the interest rates were to go up by just three percentage points.
The price of non-residential properties has also soared. In 2012, the price of retail space surged 39%, offices 23% and flatted factory space 44%.
“We shall introduce the necessary legislative amendments to the Legislative Council as soon as possible. I hope that the Legislative Council will agree to empower me to adjust the value bands and rates of both the existing and new ad valorem stamp duty by means of subsidiary legislation so that adjustments can be made in a timely manner,” he said.
Mr Tsang said since the land sale programme resumed in 2010, housing supply would increase in the coming years. He noted 48,000 unsold private flats were under construction at the end of 2012, and 24,000 new units are expected to be ready for sale this year.
He believes that the two new measures, together with the enhanced flat supply, will help cool the market, adding he would not hesitate to introduce further measures.
The new measures' introduction shows the Government has been monitoring the property market, which will affect the financial system and the overall economy, Chief Executive CY Leung said.
"If the market continues to get overheated, we will introduce further demand-side management measures in a timely manner," Mr Leung stressed.