Property transactions decline despite Hong Kong stamp duty reform

This article appeared in the South China Morning Post print edition as Deals fall despite stamp duty reform | http://www.scmp.com/property/hong-kong-china/article/1515199/property-transactions-decline-despite-hong-kong-stamp-duty

On the first weekend after the government announced the relaxation of double stamp duty, the number of major property transactions fell, but the amount of buyer interest rose significantly, said Hong Kong property agents.

The 10 biggest estates of each of the four leading property agencies saw a total of 57 property transactions in the past weekend, slightly less than the 61 transactions of the preceding weekend.

The four leading agencies are Hong Kong Property Services (Agency), Ricacorp Properties, Midland Realty and Centaline Property.

"In recent days, the Hong Kong government announced a relaxation of double stamp duty, which had a positive effect on the market," Hong Kong Property senior executive director Jeffrey Ng Chong-yip said.

"The number of property viewers has risen 20 to 30 per cent generally throughout the estates [on a weekly basis].

"Although in the short term property supply has shrunk, causing the second-hand market to stagnate, the relaxation of double stamp duty will spur the interest of clients to sell their old property for new ones."

Hong Kong Property handled seven transactions in the 10 main estates at the weekend, against 11 in the previous weekend.

Early last year, the government introduced double stamp duty in an attempt to cool the property market. Under this double stamp duty, buyers of properties costing more than HK$2 million would incur stamp duty at rates that are at least double those that previously applied unless they were permanent residents buying their first homes.

Last week, the government announced the double stamp duty would be relaxed in certain cases, to make it easier for residents to upgrade their flats. Residents moving up the property ladder will no longer have to pay a double stamp duty if their old unit is sold within six months of signing a formal agreement to buy the new property.

"In the first weekend after the government suggested relaxation of double stamp duty, the second-hand market had a slight rebound," Midland director Sammy Po Siu-ming said.

Midland handled 17 transactions in the 10 biggest estates last weekend, a slight increase from 16 transactions in the previous weekend. Ricacorp saw a drop in transactions in the 10 biggest estates to 15 in the past weekend from 16 in the previous weekend.

"The second-hand market fell, mainly because the landlords' attitude to price has hardened, while residents were not willing to enter the market at any price, causing a stalemate between both sides over price," said Ricacorp president Liao Weiqiang.

Centaline handled 18 transactions in the 10 biggest estates last weekend, the same as the previous weekend.