Hong Kong scraps property taxes to revive sluggish market

Hong Kong has axed all property transaction taxes in a bid to revive the depressed housing market, finance minister Paul Chan said in his annual budget speech.

The finance hub's economy was initially buoyed by China's post-pandemic reopening but recovery has since slowed and residential property prices are at a multi-year low.

Chan said Hong Kong would scrap three types of stamp duty with immediate effect, reversing measures introduced more than a decade ago to curb speculation and rein in sky-high property prices.

The canceled taxes include stamp duty of 15 percent of the property price imposed on buyers who are not Hong Kong permanent residents and 7.5 percent on those purchasing a second home.

"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," Chan said.

"We consider that the relevant measures are no longer necessary amidst the current economic and market conditions."

Hong Kong has long been among the world's least affordable residential markets, but property prices have retreated.

The city was boosted by China's post-pandemic reopening but those gains were wiped out as the nation's economic recovery fizzled and interest rates continued to rise.

Flat prices fell seven percent during the year and transactions slid five percent, to around 43,000.

Late last year, prices in the secondary market fell to 2017 levels -- below even the worst of the pandemic, according to market data.

Hong Kong had already reduced stamp duty last October in a bid to revive the market, but the reception had been largely muted.

With Hong Kong's currency pegged to the greenback, the city has been further pressured by the Federal Reserve's campaign of rate hikes since March 2022, which squeezed property prices and domestic consumption.