Hong Kong apartments Stamp Duty experienced a rise in the number of overseas buyers in October. The Inland Revenue Department data for the last month shows that : –
– Buyers stamp duty, which is the 15% surcharge on property price paid by corporate and non-permanent residents of Hong Kong, escalated 2.8 times to HK$880 million (US$ 112.4 million).
– The number of transactions shot up to 296, increasing by 1.8 times.
This surge has come as a result of a combination of factors such as the relaxed mortgage entitlement for first-home buyers and never-seen-before sales offers from property developers. Carrie Lam, Hong Kong’s Chief Executive announced the mortgage entitlement relaxation on 16th October and over 1,356 houses were offered for sale fuelling the largest upsurge in Hong Kong apartments for many months. A few properties that were put on sale are the Kai Tak Upper Riverbank project by KWG and Longfor Groups and the Sham Shui Po CK Assets Seaside Sonata among others.
According to the SCMP, Derek Chan, the Research head of Ricacorp Properties stated that the increase in transactions was mainly because of Cullinan West III on offer. He further added that the rise appeared even more significant as the basis was very very low.
The double stamp duty collection, which is an additional 15% surcharge paid by buyers already owning Hong Kong apartments tripled to HK$1.18 billion. This was highest in past five months and such transactions increased to 481.
The above data indicates that investors are still interested in the world’s costliest property market despite the city’s first recession in over a decade. The recession that was instigated due to the political turmoil and protests against the government now seems to be subsiding as the mainland China buyers poured in for the sale. The optimism in the Chinese buyers was evident as seven of the mainland investors dished out a total of HK$670 million to buy 24 Hong Kong apartments at Cullinan West III during September. They paid stamp duties worth HK$200 million.
The vice-chairman of Asia Pacific and the Residential Division at Centaline Property, Louis Chan said that while builders diverted the purchasing power, flat owners raised the prices to take advantage of the improving market.
The CK Asset’s Seaside Sonata sold 218 Hong Kong apartments, while the SHKP’s Cullinan West III witnessed over 58% sales from the 235 houses offered on 17th October.
However, the buying spree dwindled soon after a week of surge as the civic protests against the government continue into their sixth month. With sale of only 21 Hong Kong apartments in the last week, there was a 58% decrease as compared to the week before. Hong Kong Property Services, that tracks over 20 estates informed that the number of sales in the previous week (ending 20th October) was 68.
Another reason for the drop in sales in the last week was the disruption of traffic due to increased social movements in the city.
Midland Realty’s Chief Executive of Residential Division, Sammy Po said that the plunge in sales was also due to the raised prices by property owners. Po added that the unwillingness on part of the owners to offer any discounts could lead to further reduction in sales as the market had yet not stabilised.