HONG KONG • Hong Kong will raise stamp duties on property transactions for the first time in three years, the latest effort to check an overheated property market buoyed by capital inflows from China.
Hong Kong real estate is among the most expensive in the world and experts have forecast a further rise in home prices this year.
Skyrocketing property prices have added to growing discontent in the city, with its population already under strain from high living costs and a widening wealth gap.
The government will raise stamp duties on home purchases to 15 per cent, across the board, effective today, to dampen a red-hot market which has failed to respond to a raft of measures taken by policymakers in recent months.
Until now, the highest levy for residents was 8.5 per cent, while foreigners already pay a 15 per cent stamp duty.
"We expect the measure to have an immediate and effective cooling impact," Financial Secretary John Tsang told a news conference.
"We have to prevent the risk of property bubble from worsening, which in turn can threaten our economy and even the stability of the financial system," he noted.
First-time local home buyers will be exempt from the latest tightening measures with stamp duty ranges remaining from 1.5 per cent to 4.25 per cent, depending on the value of the property, officials said.
Hong Kong home prices surged in September for the sixth consecutive month to hit the highest level in nearly a year, government data showed on Monday.
Mainland buyers hedging against a falling yuan and with a wealth of financing have undone the Hong Kong government's previous attempts to make housing more affordable.
The city has one of the world's most unaffordable property markets, stoking discontent about inequality and lessening its appeal to expatriates. Senior officials also voiced concern that soaring prices could threaten financial stability.
Soaring property prices this year are in stark contrast to the slowdown in the overall economy, as evident from flagging retail sales and slowing economic growth, and industry officials said renewed mainland purchases had been a key factor behind the rise.
One of the city's largest property agencies, Centaline Property Agency, has forecast home prices will return to peak levels in the fourth quarter this year.
The Centaline Property Centa- City Leading Index, which tracks sales in the secondary market, has rallied 13 per cent since reaching a low point in March amid demand from mainland Chinese buyers and locals. The index is now just 2 per cent shy of the record it hit last September.