The Hong Kong government said on Tuesday first-time home buyers purchasing more then one flat at the same time would be subject to a 15 percent stamp duty, the latest bid to cool property prices in one of the world’s most expensive real estate markets.
Home prices in Hong Kong have jumped 364 percent since 2003, while the median monthly household income has risen just 61 percent, pushing home ownership out of reach for many.
Hong Kong last introduced property cooling measures in November 2016, raising stamp duty on property transactions for the first time in three years but the measures had little impact.
“We should suppress three types of demand: speculative, external, meaning buyers from outside Hong Kong, and also investment demand,” Hong Kong leader Leung Chun-ying told reporters.
“The new proposal, which will take effect after midnight tonight, is to ensure that people do not buy more than one unit by using one legal document.”
Leung said some buyers had been using one legal document to buy multiple flats to skirt stamp duty on second homes, pushing up prices across the board.
“If buyers use one legal document to buy more than one residential flat, the relevant transaction will be taxed at 15 percent,” he said.
Leung, who steps down in July after a five-year term, took power in 2012 with a pledge to make housing more affordable, but since then prices have hit fresh record highs.
He emphasized the government’s efforts in raising housing supply, while financial secretary Paul Chan said he expects the potential supply of new flats in Hong Kong over the next three to four years to exceed the December estimate of 94,000 units, hitting a new high.
Beijing-backed incoming leader Carrie Lam has pledged to tackle the city’s housing problem, which is also a top concern of many foreigners working in Hong Kong.
Lam’s goal to cool the property market will be challenged by the recent influx of Chinese capital snapping up some of the city’s best plots of lands at record-breaking prices.
Thomas Lam, senior director at property consultancy Knight Frank, said the new measure would not have a big impact on developers, but would give the average buyer more opportunities to buy a flat.
“This measure does not have a big impact on the market, but the government is sending a message to the market and to the developers, telling them they do not encourage this (multiple) transaction method,” he said.
The relentless rise in home prices had prompted renewed speculation that the government may impose more property tightening measures such as curbs on multiple property purchases at one time in order to puncture the trend.
The Chinese-ruled city has seen a sharp rise in the number of first-time buyers purchasing multiple properties in one go to avoid paying a levy, though these cases only take up 4.7 percent of all transactions, Leung said.
Soaring property prices are in stark contrast to the slowdown in the former British colony’s overall economy, as evident from flagging retail sales and sluggish economic growth.
By Venus Wu and Twinnie Siu. Additional reporting by Michelle Price; Writing by Anne Marie Roantree; Editing by Nick Macfie.