In an unexpected announcement, the HK government issued further measures on Friday evening to curb the development of a real estate bubble and associated risks of financial instability.
The main changes are as follows:
– Properties transacted below HKD2M will now incur a stamp duty of 1.5% of transaction price (opposed to flat fee of HKD100).*
– Properties transacted above HKD2M will be subject to stamp duties double those previously in place (a maximum of 8.5%).*
– Non-residential properties will now be subject to stamp duties, and the mortgage-to-income ratio will be lowered from 50 to 40%.
– A person applying for a mortgage will have to pass a stress test to show he/she can afford mortgage payments should interest rates increase by up to 3%.
– Mortgages on car parks will now be capped at 40% and a repayment period of 15 years.
*Local first time home buyers will be exempt from the additional duties, as will locals selling their only home and buying a new one within 6 months.
Asking prices are expected to decrease to match the increase in additional stamp duty. Analysts and agencies are predicting a 50% drop in transactions in the coming months.
For more details, see: