A general view of residential buildings in West Kowloon District, Hong Kong on April 11, 2023. (ANDY CHONG / CHINA DAILY)

Property analysts hope the Hong Kong SAR government could scrap or relax some housing market tightening measures such as buyer’s stamp duty to shore up the faltering market amid the recent fall in home prices in the city.

The residential home price index tracked by the Rating and Valuation Department in August was 339.2, down 1.4 percent from the previous month. In the first eight months of this year, the cumulative increase in property prices has shrunk to only 1.34 percent. In August, the city’s residential real estate market recorded a cumulative price decline of 14.8 percent from the record-high registered in September 2021.

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Derek Chan Hoi-chiu, head of research of Ricacorp Properties, pointed out that the decline in property prices in August mainly reflects the continued interest rate hikes in Hong Kong and the United States in late July, sluggish market sentiment, and aggressive price cuts in first-hand residential projects by developers.   

Cathie Chung, senior director of research at Jones Lang LaSalle in Hong Kong, argued that the refund of buyer’s stamp duty (BSD) to non-local buyers upon becoming a permanent resident announced last year had little impact on facilitating non-local talents’ access to the housing market

“The market is focusing on whether the Policy Address on October 25 will include measures to remove or lessen the home market tightening measures, which will be the key to whether Hong Kong property prices can reverse the downward trend during the quarter,” Chan said.

“If the authorities introduce specific measures to stimulate the property market, then the market is expected to stabilize in the fourth quarter, and property prices are expected to remain flat throughout the year. If the Policy Address lacks specific measures, in the worst case, property prices for the year are expected to fall 3 percent to 5 percent,” Chan cautioned.

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Financial Secretary Paul Chan Mo-po said in Wednesday’s press briefing the SAR have noticed that the current situation of the property market is somewhat different from the situation when the tightening measures were introduced.

“This year, we have seen that the property market has basically stabilized. The transaction volume is still slightly lower than the long-term average of about 5,000 transactions per month, but overall it is still stable. The government has been paying close attention to the market situation,” the finance chief noted.

The government has introduced successive rounds of tightening measures since 2010 to cool the sizzling home market, including a special stamp duty in November 2010, a buyer’s stamp duty in October 2012, a doubled ad valorem stamp duty in February 2013, as well as a new residential stamp duty in November 2016.

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Cathie Chung, senior director of research at Jones Lang LaSalle in Hong Kong, argued that the refund of buyer’s stamp duty (BSD) to non-local buyers upon becoming a permanent resident announced last year had little impact on facilitating non-local talents’ access to the housing market as reflected by the number of transactions involving BSD in the first eight months of 2023 remained flat compared to the same period last year. 

“We believe that delaying the payment of the BSD from the time of purchase to the time of sale could strengthen the housing market’s stability while curbing speculative demand. Doing so could smooth the home price trend and moderate the chance for home price to search for a lower new trough, as non-local talents could enter the market more easily now rather than several years later, providing necessary support to the market,” Chung noted.