(Source : Information Services Department)
Further measures to address overheated property market
The Government spokesman said today (October 26) that the Government would introduce further measures to address the overheated property market.
The Government will amend the Stamp Duty Ordinance (the Ordinance) to adjust the duty rates and extend the coverage period in respect of the existing Special Stamp Duty (SSD), and introduce a Buyer's Stamp Duty (BSD) on residential properties acquired by any person except a Hong Kong Permanent Resident (HKPR).
The adjusted SSD will have three levels of regressive rates for different holding periods –
(i) 20 per cent if the property has been held for six months or less;
(ii) 15 per cent if the property has been held for more than six months but for 12 months or less; and
(iii) 10 per cent if the property has been held for more than 12 months but for 36 months or less.
The BSD will be charged at a flat rate of 15 per cent for all residential properties, on top of the existing stamp duty and SSD, if applicable, acquired by any person or entity, except a HKPR. Exemptions will be provided to certain transactions including, for example, those involving a HKPR and his or her close relatives who are not HKPR.
"Subject to the enactment the legislative amendments to the Ordinance, the adjusted rates and extended holding period of SSD and the new BSD will be applicable to all residential properties acquired on or after tomorrow (October 27)," said the spokesman.
The Government has been monitoring the development of the private residential property market closely and remains vigilant on the risks of a property bubble. Various measures have already been introduced at different stages since 2010 to ensure the healthy and stable development of the property market. While the various measures introduced so far have had a positive effect, the private residential property market is still exuberant.
While speculation has declined significantly as a result of the SSD, the current property boom is clearly fuelled by abundant liquidity and low interest rates. Overall flat prices have risen by 20 per cent during the first nine months of 2012, culminating so far at a hefty increase of 107 per cent over the 2008 trough. By September 2012, overall flat prices have surpassed the 1997 peak by 26 per cent. Moreover, the mass market flats (i.e. flats smaller than 70 square metres in saleable area) have increased by 21 per cent during the first nine months of 2012, far higher than the 11 per cent increase for that of large flats over the same period.
The launching of the third round of "quantitative easing" by the United States Federal Reserve on September 13, 2012 also leads to the market expectation of a fresh round of a huge capital inflow into Hong Kong and rising inflation, thereby precipitating a further build up of exuberance in the housing market.
"The overheated property market has deviated from the fundamentals of the local economy which shows signs of slowing down. The Government believes that the introduction of the two demand-management measures today, together with increasing supply of residential properties in near future, will help ensure the healthy and stable development of the property market and reduce the risk of an asset bubble," said the spokesman.
Apart from the above-mentioned measures, which aim to address the housing problem from the demand-side perspective, the Government will continue its efforts to increase land and flat supply to tackle the problem at source.
Ends/Friday, October 26, 2012
Issued at HKT 22:19