Hong Kong budget 2024-25: finance chief Paul Chan scraps all property curbs in radical bid to boost ailing market

/ South China Morning Post |

February 28, 2024 1:07 PM SGT

All cooling measures on the Hong Kong property market have been removed with immediate effect. This includes a Buyer’s Stamp Duty (BSD) that targets non-permanent residents and a New Residential Stamp Duty (NRSD) for second-time purchasers.

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All decade-old property cooling measures scrapped with immediate effect as authorities look to revive market

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Hong Kong finance chief Paul Chan Mo-po has announced the city will remove all restrictions on property transactions as part of his solutions to the city’s sluggish economy and shrinking fiscal reserves in what some analysts are calling the most difficult budget blueprint ever.

Themed “Advance with Confidence. Seize Opportunities. Strive for High-quality Development”, the budget blueprint being unveiled on Wednesday morning includes a series of measures to spur growth.

All of the decade-old cooling measures aimed at curbing speculation have been scrapped with immediate effect in a bid to revive Hong Kong’s depressed property market, with lived-in home prices falling for the ninth straight month in January to a level last seen in 2016.

Fresh funding has been earmarked for energising tourism while salary and profit taxes have been reduced to ease the financial burden on the public and small and medium-sized enterprises amid the government’s dire financial health.

The financial secretary has pledged to take a more targeted approach to spending this year and ditch consumption vouchers for residents as the city’s deficit has ballooned to HK$101.6 billion, potentially leaving Hong Kong’s fiscal reserves at their lowest in a decade.

Property market curbs lifted

Chan removes all cooling measures on the property market with immediate effect. This includes a Buyer’s Stamp Duty (BSD) that targets non-permanent residents and a New Residential Stamp Duty (NRSD) for second-time purchasers.

Homeowners will no longer need to pay a Special Stamp Duty (SSD) if they sell their home within two years.

“After prudent consideration of the overall current situation, we have decided to cancel all demand-side management measures for residential properties with immediate effect, that is, no SSD, BSD or NRSD needs to be paid for any residential property transactions starting from today,” he says.

“We consider that the relevant measures are no longer necessary amid the current economic and market conditions.”

The finance chief says scrapping all cooling measures has taken into account the external and internal economic situation, and he considers there is “now room to make further adjustment to the relevant measures and other supervisory policies pertinent to property lending where appropriate, under the premise of maintaining the stability of the banking system”.

He says the Monetary Authority will make an announcement later on Wednesday.

The decision follows the government’s move last October to halve buyers’ stamp duty for non-permanent residents and for additional properties. The move brought both down to 7.5 per cent from the previous 15 per cent.

There was also the introduction of a stamp duty suspension arrangement for incoming professionals’ acquisition of residential properties, which Chan says has been well received by talent, with more than 500 applications approved.

This article first appeared on the South China Morning Post as part of their coverage of Hong Kong's Budget 2024/2025.

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