HK scraps property taxes to revive sluggish market
Finance minister says three types of stamp duty ‘no longer necessary’
The special administrative region has axed three major property transaction taxes in a bid to revive its depressed housing market, Finance Minister Paul Chan said in his annual budget speech yesterday.
Hong Kong is among the world’s least affordable residential markets, but home prices retreated last year amid high interest rates and China’s economic slowdown.
Chan said Hong Kong immediately scrapped three types of stamp duty, reversing measures introduced more than a decade ago to rein in speculation fuelled in part by mainland Chinese buyers.
“After prudent consideration of the overall current situation, we decide to cancel all demand-side management measures for residential properties with immediate effect,” Chan told the legislature.
The cancelled taxes include stamp duties – which were once as high as 15% – imposed on property buyers who are not Hong Kong permanent residents and on those purchasing a second home.
“No Special Stamp Duty, Buyer’s Stamp Duty or New Residential Stamp Duty needs to be paid for any residential property transactions starting from today,” Chan said.
“We consider that the relevant measures are no longer necessary amidst the current economic and market conditions,” he said, noting that residential market sentiment became “very cautious” since the middle of last year.
The Asian finance hub had already reduced stamp duty last October in a bid to revive the market, but the reception had been largely muted.
Flat prices fell 7% last year and transactions slid 5% to around 43,000.
The weak housing market has also hurt public finances, with the Hong Kong government heavily reliant on land sales for revenue but only netting HK$19.4 billion (RM12 billion) last year.
Hong Kong recorded a HK$102 billion deficit in 2023/2024, with fiscal reserves falling to HK$733 billion due to “challenges posed by the epidemic and external environment”, Chan added.
The economy is expected to grow between 2.5% and 3.5% this year, the finance chief said, aided by factors such as the US Federal Reserve’s expected interest rate cut.
“Amid a complicated and ever-changing international environment ... more strenuous efforts are required to strengthen momentum of our economic recovery.”
Hong Kong hopes to reboot its reputation as a finance capital following years of strict pandemic curbs and social unrest, with critics saying that Beijing’s ongoing political crackdown on the city has led to an exodus of talent and capital.