The increased cost of property transactions in Hong Kong, after the hike in
stamp duties introduced by the Government early last year, appears to have succeeded
in cooling the real estate market by significantly reducing the number of property
The number of sale and purchase agreements for all building units received
for registration for 2013 was 70,503, down by 39 percent compared with 2012
and by 35.2 percent compared with 2011. The total consideration for these agreements
for 2013 was almost HKD456.3bn (USD58.9bn), a reduction of 30.2 percent compared
with 2012 and 22.4 percent compared with 2011.
While Hong Kong's property prices are still reported to have grown in 2013, the
rise of less than 3 percent is a marked slowdown. With prices now predicted
to decline in 2014, particularly for luxury residential properties, the Government
appears to have been successful in the further measures it took in February
last year to address what was then an overheated property market.
By the beginning of last year, the Buyer's Stamp Duty and the increased Special
Stamp Duty introduced in October 2012 had gone some way in driving down demand
from those who were not Hong Kong permanent residents (HKPRs), but property
market prices continued to rise.
The Government therefore decided, with effect from February 23, 2013, to increase
the cost of property transactions generally by doubling the rates of existing
ad valorem stamp duty applicable to both residential and non-residential properties,
while stamp duty for transactions of HKD2m or below rose from a HKD100 flat
fee to 1.5 percent of the transaction's value.
However, the new stamp duty rates do not apply to HKPR buyers who are not beneficial
owners of any other residential property in Hong Kong at the time of acquisition
of a residential property.
A comprehensive report in our Intelligence Report series
dealing with the issues raised by international property investment, and the possible
taxation implications raised by such purchases, with an account of the likely (and some less
obvious) potential countries for your consideration, is available in the Lowtax
Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp
and a description of the report can be seen at