During his yearly budget speech on Wednesday, Finance Minister Paul Chan announced that Hong Kong has eliminated three significant property transaction fees in an effort to boost the city’s struggling real estate market.
The financial center has one of the most expensive residential markets in the world, but due to rising interest rates and China’s slowing economy, property values fell last year.
According to Chan, Hong Kong promptly eliminated three different kinds of stamp duties, going back on policies put in place more than ten years ago to control speculation stoked in part by mainland Chinese buyers. He told the assembly, “We decide to cancel all demand-side management measures for residential properties with immediate effect after prudent consideration of the overall current situation.”
The cancellation of taxes includes stamp duties, which were previously levied at a rates of 15% on non-permanent residents of Hong Kong and those buying a second home. Chan stated that “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.” He added, “We consider that the relevant measures are no longer necessary amidst the current economic and market conditions,” noting that sentiment in the residential market has become “very cautious” since the middle of last year.
In an attempt to stimulate the market, Hong Kong had previously lowered stamp duty in October of last year, but the response was mainly negative. In 2023, flat prices decreased by 7% while transactions decreased by 5%, reaching approximately 43,000.
Public finances have also been negatively impacted by the sluggish property market; the Hong Kong government, which mostly depends on land sales for income, only made HK$19.4 billion ($2.5 billion) last year.
In 2023–24, Hong Kong’s fiscal reserves dropped to HK$733 billion as a result of “challenges posed by the epidemic and external environment.” The city recorded a HK$102 billion deficit.
According to the finance chief, boosting attractiveness, Hong Kong’s economy would rise by 2.5 to 3.5 percent this year, helped by the US Federal Reserve’s anticipated interest rate reduction.
