No worries, no (downward) pressure despite stamp duty
Home values in Hong Kong may not cease rising this year, stamp duties notwithstanding, analysts suggested.
Despite the chill factor of the levy on second-time home buyers, the Chinese SAR’s residential market is expected to show resilience, thanks to robust money supply and other economic indicators.
“I cannot foresee any downward pressure driven by the new stamp duty policy as the M3 is up to a new high, exceeding HKD12 million (USD1.5 million),” Vincent Cheung, executive director at Colliers International Hong Kong, said. “The overflow of cheap money after the quantitative easing of various countries and the expectation of further depreciation on the renminbi attracted the Chinese buyers to continue buying properties in Hong Kong and overseas countries.”
Cashed-up home buyers drove sales in the Hong Kong primary market last year to their highest level since 1995, data from the Land Registry showed last week.
On 5 November, the Hong Kong government increased the stamp duty to 15 percent for all non-first-time home buyers. The stamp duty hike is largely designed to curtail speculative demand from buyers who already own a residential property in the city.
“The impact of the measures on the primary market will likely be mild because developers can offset the extra stamp duty costs with various subsidies,” Alva To, senior managing director of DTZ C&W in Hong Kong, told the South China Morning Post.
“For the primary home sales, most of the developers would provide allowances for the buyers to settle the new stamp duty, and the developers can easily offer top-up mortgage for the buyers,” Cheung said. “In addition, the developers would bear the agency costs for the primary home sales.”
To offset the cost of stamp duty rebates, developers may raise list prices by 10 or 15 per cent, Henry Mok, regional director of capital markets at Jones Lang LaSalle, told the Post.