Hong Kong lifts curbs on property deals as house prices fall to seven-year low

29 February 2024 , 12:03

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Holding a sign of anti-Article 23 bill, pro-democracy activists shout slogans during a candlelight vigil at a downtown Hong Kong park (Image: Copyright 2022 The Associated Press. All rights reserved.)

Hong Kong's government has decided to lift restrictions on property deals after house prices dropped to a seven-year low, adding to the Chinese territory's troubles.

Finance minister Paul Chan revealed this change during a speech about the territory's budget, which also included increased spending on promoting tourism. He said all restrictions, like extra taxes, that were put in place earlier to cool down the property market would be removed straight away.

House prices have been dropping for nine months in a row and share prices have been low as changes to freedoms in the former British colony have worried investors. At the same time, Hong Kong's tourism hasn't fully bounced back after it reopened to foreign travellers following the COVID-19 pandemic.

China's slowing economy has also affected Hong Kong's recovery. Chan said the limits on property transactions were "no longer necessary amid the current economic and market conditions."

The government has removed a 15% stamp duty charged on non-permanent residents who buy property in Hong Kong and a 15% stamp duty charged on purchases of a second property.

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Homeowners also don't have to pay a separate duty on sales of homes bought less than two years before. Chan said more steps might be taken to make property lending easier. Chan said: "We consider that there is now room to make further adjustments 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,".

Last year, taxes on home purchases by non-permanent residents and those buying additional properties were cut in half. Shares of property developers in Hong Kong jumped after the scrapping of cooling measures was announced. Henderson Land's shares rose 4. 1%, while New World Development's soared 5. 9%. Sun Hung Kai Properties jumped 4. 1%.

As an extra tourist attraction, Chan said the city will revamp its light show on scenic Victoria Harbor and stage monthly pyrotechnic and drone shows over the waterfront. The city also will collaborate with mainland Chinese cities to boost tourism in the Greater Bay Area surrounding Hong Kong.

Mainland Chinese tourists are the majority of visitors to Hong Kong. Over the Lunar New Year holidays, Hong Kong recorded nearly 1.44 million visitors to the city, nearly 90% of them from the mainland.

In 1997, Britain gave control of Hong Kong back to Beijing. They agreed that Hong Kong could keep many of its Western-style freedoms, like its own legal system and press freedom, for 50 years. But, after big pro-democracy protests in 2019, a lot of these freedoms have been cut back because of new national security laws.

Lawrence Matheson