Hong Kong Used Home Sales Fall to 9-Month Low on Non-Locals Tax

Hong Kong Used Home Sales Fall
Residential and commerical buildings stand in the mid-levels district, center, with Victoria Harbour and the Kowloon Peninsula beyond in Hong Kong, China. Photographer: Jerome Favre/Bloomberg

The number of property transactions recorded at Hong Kong’s 10 largest estates on the weekend fell to the lowest level since January as a tax on non-local buyers imposed last month curbs investors’ interest.

Ten sales were registered, from 12 a week earlier, Centaline Property Agency Ltd. said in a report yesterday. The government imposed a 15 percent tax on property purchases by overseas and corporate buyers on Oct. 26 in its harshest measures yet to control home prices. Hong Kong Chief Executive Leung Chun-ying has pledged to rein in the real estate market to stem a three-year surge that has almost doubled prices.

“Many potential sellers are choosing to hold on to their properties rather than selling them at cut prices,” said Vincent Cheung, an executive director at realtor Midland Holdings Ltd. “At the same time, buyers are looking for bargains and that’s why we’ll be seeing low transaction figures for a while.”

The tax to deter capital inflows and reduce the risk of a bubble in the world’s most expensive housing market marks the third set of curbs since August. Leung has tightened mortgage requirements and boosted the supply of land for developers as the boom triggered protests over a widening wealth gap.

A Midland survey conducted after the new measures were introduced showed 62 percent of 229 mainland Chinese asked said they will hold off from buying properties in Hong Kong for the next six months, while 3 percent said they won’t buy in the city anymore, the company said in a Nov. 1 statement.

Other Measures

Monthly sales at the 10 largest estates rose 7.6 percent in October, Centaline, the city’s biggest closely held realtor, said in a second e-mailed report. Turnover will probably slow in November and December because of the new tax, the report said.

Government officials, including Financial Secretary John Tsang, have said in the past week the government will consider other measures to curb prices if necessary.

Leung, who took over as the city’s leader in July, has pledged to increase housing supply in his battle to curb a growing asset bubble. The former surveyor said in September that there will be as many as 65,000 new private units available in the next three to four years. That’s at least 30 percent higher than the average under Donald Tsang, his predecessor, according to estimates by Nicole Wong, an analyst at CLSA Asia-Pacific Markets.

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