In a bid to fortify its standing as a global financial hub, Hong Kong’s Chief Executive, John Lee, announced tax reductions for specific groups of homebuyers and stock traders. Lee revealed the halving of extra stamp duties for non-resident homebuyers and local homeowners seeking additional properties, marking the first relaxation in a decade since property market cooling measures were initiated.
Additionally, in his annual policy address, Lee outlined plans to lower the stamp duty on stock transactions from 0.13% to 0.1%. He stressed the significance of a thriving stock market in upholding Hong Kong’s status as a financial hub and aimed to complete the required legislative procedures by November.
Hong Kong’s Economic Recovery Amid Challenges
As Hong Kong emerges from COVID-19 restrictions, its economy has witnessed a revival driven by tourism and increased private consumption. Notably, the city’s economy expanded by 2.2% year-on-year in the first half of 2023, with growth projections of 4% to 5% for the full year.
Nonetheless, the journey to complete economic recovery remains uneven, marked by growing geopolitical tensions, and mainland China, Hong Kong’s largest trading partner, is facing a gradual rebound.
A significant challenge has been the exodus of residents in recent years due to a crackdown on pro-democracy activists, triggered by Beijing’s imposition of a stringent national security law and subsequently rescinding strict COVID-19 mandates. The exodus of residents has negatively impacted the local economy and property market, resulting in a 15% year-on-year home price drop in December and a 39% annual decrease in residential property transactions during 2022.
In light of the declining transactions and property prices due to increased interest rates and economic challenges elsewhere, Chief Executive John Lee has implemented measures to address property demand management.
Hong Kong Property Tax Cuts to Boost the Market
In a bid to stimulate the property market, Hong Kong has reduced stamp duty rates, significantly impacting foreign buyers and local homeowners. Foreign purchasers exclusively acquiring properties in the city will now pay just 15% of the purchase price in taxes, down from the previous rate of 30%. Local homeowners buying their second properties will see their tax burden reduced to 7.5%, down from the earlier rate of 15%.
Additionally, foreign professionals working in Hong Kong under eligible visa programs will no longer be subject to extra property stamp duties linked to non-permanent residency, provided they later attain permanent resident status.
Chief Executive John Lee emphasized fostering talent retention in Hong Kong through these measures. However, property experts like Joseph Tsang from Jones Lang LaSalle in Hong Kong doubt the long-term efficacy of these tax reductions in reversing declining home prices. These developments in Hong Kong’s property market have garnered attention on BNN World News, shedding light on the local real estate dynamics.
The enforcement of the national security law in 2020 led to the arrest or silencing of many prominent pro-democracy activists, significantly altering the political landscape. While Beijing and Hong Kong authorities have lauded the law for restoring stability, it remains a contentious issue. This development has garnered attention on BNN World News and is emblematic of the ongoing challenges in the region.