No plan to relax stamp duty on homes, government stresses

Hong Kong says it has no plans to relax the stamp duty on home purchases, following comments from a top government adviser that it was among policies under consideration to shore up the economy.

"Mainland professionals have been clamoring for the double stamp duty to be waived for them, even before they acquire the right of abode," Regina Ip Lau Suk-yee, convenor of the government's advisory Executive Council, told Bloomberg Television yesterday.

"It is all a raft of measures under consideration and this is certainly something that the government could consider."

Ip's comments triggered a rally in local developer shares. The stocks pared gains after the government said in a statement it did not plan to reduce property taxes.

"Regarding reports that the government is considering the relaxation of stamp duties for property, the government clarifies that there has not been discussion on the matter, and points out clearly that there are no relevant plans," the statement said.

Foreign buyers of residential property need to pay a 30 percent levy on all purchases under measures introduced in the past decade to cool home prices. Waiving the double stamp duty may reduce that to 15 percent.

Ip later issued a statement saying her comments on waiving stamp duty are based on a proposal made by her political party - the New People's Party - which she would put forward during the consultation period for Chief Executive John Lee Ka-chiu's policy address, and she was not referring to any specific measure under consideration by the government. She also said she was referring to "buyer's stamp duty," an additional upfront tax on non-permanent-resident buyers imposed by the government in 2012. Lee will deliver his policy address in October.

Her comments came before the Inland Revenue Department released the latest stamp duty data yesterday, showing that the number of home transactions involving buyer's stamp duty plunged by 47 percent last month from a month earlier to a 19-month low of 33.

The amount of such tax revenue received by the government also sank by 42 percent to HK$93 million, the lowest in 17 months, as mainlanders - one of the most important contributors to the duty - were not able to travel freely to the city due to border closure.

The overall number of cases involving stamp duty from home sales in July also declined by nearly 25 percent from June to 212, a reading last seen in 27 months, the data showed.

The sluggish stamp duty revenue performance mirrored the inactive property market in the city.

Home sales slumped about 57 percent by value in July from a year earlier, said the Land Registry.

The official home price index also fell 1.1 percent month-on-month in June to 380.5 following a 0.2 percent decline recorded in May, data from the Rating and Valuation Department shows.

Rising interest rates and a worsening economy are projected to weigh on property prices in one of the world's most expensive real-estate markets.

The prime rate is expected to be raised as soon as this quarter, which will lift the cap of the mortgage rate linked to the one-month Hong Kong interbank offered rate, putting more pressure on the sector. Investment house Goldman Sachs has predicted home prices could fall 20 percent over the next four years.

Hong Kong's economy contracted for a second consecutive quarter in April to June with gross domestic product declining 1.4 percent from a year earlier, much worse than economists' forecasts for a 0.2 percent drop.

Hong Kong is battling to regain its status as a global aviation and commerce center after years of strict Covid border controls isolated the SAR and fueled an exodus of residents. A revised-down GDP forecast for this year by the government will be delivered on Friday.