Hong Kong unveils more property-cooling measures

Fri Feb 22, 2013 6:36am EST
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By James Pomfret and Alison Leung

HONG KONG (Reuters) - Hong Kong is imposing higher stamp duties and home loan curbs on property transactions, officials said on Friday, the latest effort to cool an overheated property sector that boasts some of the world's most expensive apartments.

Financial Secretary John Tsang said "exuberance has regained momentum" in Hong Kong's property market, and for this reason stamp duties for flats would be increased across the board for most buyers.

Tsang said the measures were needed to keep the potential economic risk from spreading in the financial hub.

"The risk of an asset bubble is increasing. If we allow the bubble to grow, in the end it will affect the macroeconomy and also the stability of the financial system. It will be very damaging to society," Tsang told reporters.

"These measures will help narrow the supply-demand gap, contribute to the stable development of our property market and the stability of our financial system," Tsang said.

For flats costing less than HK$2 million (about $258,000), the stamp duty would be increased from HK$100 to 1.5 percent of the transaction price, while the stamp duty for other properties would be doubled to as much as 8.5 percent of the residential transaction price.

The increased stamp duties, however, would not apply to Hong Kong residents buying residential property for the first time in the city, in a bid to allow new local homemakers to enter the market, while other limited exemptions were possible.

The government also said it would standardize the stamp duty regime for non-residential properties such as shops, factory space, office space and even car parking spaces to avoid speculative hot money flowing into these other categories.   Continued...

People walk in front of residential towers in Hong Kong February 22, 2013. Hong Kong will impose new measures, including raising buyers' stamp duties, to cool its overheated property sector, which has some of the world's most expensive apartments, officials said on Friday. REUTERS/Bobby Yip