The fiscal income from the land sales is evaporating and Hong Kong is removing all of its property taxing measurements. The government is making an audacious attempt and restore the normalcy to the market that has come to a standstill. It’s also showing the world what the true financial centers should be.
For foreigners, the good news is they do not have to pay extra stamp duty during property buying. The death of 28-year-old socialite and model Abby Choi positioned the spotlight on these controversial housing policies.
Hong Kong’s central bank also eased its mortgage rules by lowering loan-to-value ratios in a blended move with its fiscal peers.
Hong Kong also relaxing restrictions that can lead to a flood of housing units being put up for sale. Homeowners who buy their property for less than two years will no longer need to pay extra for special stamp duty during the sale.
The data from the Hong Kong Housing Bureau stated
A total of 91,300 flats remain unsold as of the 2023 year-end. This is the highest number in the two decades. Special stamp duty was implemented in 2010 to curb speculation but has almost worked too well. Transaction volume tumbled and became a barrier cities’ home prices continue to fall.
However, if there are only sporadic sales within a district, how can a potential buyer determine the asking price? Sitting on the sidelines makes sense.
Therefore, the elimination of this charge will expedite the process of price discovery. Where the sector bottoms out will be known more quickly. If there are no transactions in a market, it might as well not exist.
Indeed, Hong Kong’s real estate market is far from at its lowest point despite these positive policies. Since its high in late 2021, housing prices have decreased by almost 25% on average. Even if that sounds significant, the decline following the Asian Financial Crisis in 1997 is far worse. Others fear that a new storm is on the horizon.Â
Hong Kong’s future is uncertain, but it can offer functional capital markets, attracting investors without purchase restrictions or short-selling bans.
