Higher Stamp duty for Hong Kong property buyers
After almost three years, Hong Kong, is rising stamp duties on property transaction. Their real estate is one of the most expensive in the world, and many experts have suggested it will rise more this year. The skyrocketing prices, has contributed towards the already growing discontent. The widening wealth gap, and rising living costs had people under pressure.
To add to it, the government had added another 15% on stamp duty charges. This change was made to help get a response from the real estate market, which was unresponsive to numerous measures taken by policymakers in the last few months.
The highest levy residents of Hong Kong had paid was 8.5%, whereas the foreigners living in Hong Kong were already paying 15% stamp duty.
John Tsang, financial secretary in an interview said; the policy makers are expecting an effective cooling response from the real estate market. He added; this move was made to ensure that the conditions do not get worse, which can threaten their economy.
An official stated that; local home buyers will not be affected by these changes, and will keep paying 1.5% to 4.2% stamp duty depending on the value of their homes.
Government data showed, that home prices in Hong Kong, surges this September, hitting the highest level in just a year.
Hong Kong’s government’s last attempt to make housing more affordable was undone by Mainland buyers, when the Yuan fell. Hong Kong, has one of the world’s most unaffordable real estate market. Officials have been showing concern over the matter for some time now, as it can cause financial instability.
The rise in property prices this year, are the reason we have seen economic growth. The reason being mainland purchases, according to industry officials.
Centaline Property Agency, is one of the largest property agency in Hong Kong, and they have predicted that prices will bounce back during the fourth quarter.
Hong Kong’s leading Index, the Centaline Property Centa, tracks all sales done in the secondary market. They show second market has reunited 13% since reaching their lowest point this year in March. This index is just 2% less than last yea’rs record.
After the announcement of stamp duty rise, many developers suspended sales of their units. According to industry observers, buyer turnout has been lower than seen in previous months.
Sales director at Madland Realty, Eric Fong, said; the turnout was only 50% of the subscriptions received, which is usually 80%. He added that most buyers that did show up, were first time buyers. Investors lost their interest due to an increase in the stamp duty charges.
After a 15% announce on stamp duty, it was made clear that these duties will not affect first time buyers looking for a permanent residence. This step was taken to cool down Hong Kong’s real estate market. As China and mainland buyers were taking advantage of the fallen yuan, and buying numerous homes to invest in.
First time buyers are supporting the government in their stance, as they are unaffected by the rise in stamp duty charges. This means the market will cool down, and more local residents will be able to afford permanent homes. This was a necessary step taken by the local government who was under a lot of pressure, as property prices were on the rise for the last six months, so in order to help save their economy the policy makers came up with a plan to increase stamp duty 15% higher. Many predictions state that this increase will not cool off the market for long, and these high prices will be back in action soon.
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