Hong Kong Property Deals Down Sharply

By ExpatBriefing.com Editorial 12 January, 2012

The Land Registry of Hong Kong has announced that it recorded 108,814 sale and purchase agreements for all building units for 2011, down 33.1% year on year and down 18.8% when compared with 2009.

The total consideration for sale and purchase agreements for 2011 was HKD587.89bn (USD75.7bn), 14.7% down year on year but up 14% compared with 2009. The number of assignments of building units for 2011 was 149,215, down 20.2% compared with 2010 but up 5.6% compared with 2009.

The total consideration for these assignments for 2011 was HKD714.19bn, up 4% compared with 2010 and up 51.4% compared with 2009. There were 5,156,556 land-register searches for 2011, down 14.2% year on year but up 3.8% compared with 2009.

The figures perhaps reflect the success of recent measures aimed at cooling speculation in Hong Kong's property market, which has been the destination for millions of dollars of 'hot money' inflows in the last couple of years.

One measure aimed at curbing short-term speculation was the introduction of Special Stamp Duty (SSD) in November 2010. The resulting Stamp Duty (Amendment) (No.2) Bill 2010 imposed the new duty on residential property transactions of all values acquired from November 20, 2010 and resold within two years, in addition to the current ad valorem stamp duty.

The policy objective of levying SSD was to substantially increase the cost of short-term residential property transactions. SSD is be based on different holding periods - 15% for property held for six months or less; 10% for more than six months but one year or less; and 5% for more than one year but less than two years.

In conjunction with the SSD, the Hong Kong Monetary Authority (HKMA) issued a circular to Hong Kong’s banks requiring them to implement further measures to strengthen risk management in their residential mortgage lending business.

Following the introduction of the SSD, the HKMA lowered the maximum loan-to-value (LTV) ratio for residential properties with a value at HKD12m or above from 60% to 50%, while the maximum LTV ratio for residential properties with a value at or above HKD8m and below HKD12m was reduced from 70% to 60%, and the maximum loan amount capped at HKD6m.

Tags: Expatriates | Tax | Investment | Business | Real-estate Investment | Speculation | Real-estate | International Financial Centres (IFC) | Offshore | Stamp Duty | Hong Kong |


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