HONG Kong doubled the sales tax on properties costing more than HK$2 million (US$258,000) and targeted commercial real estate for the first time as the risk of a bubble spreads from apartments to parking spaces, shops and hotels.
The stamp duty will increase to 8.5 percent of the purchase price for all properties, Hong Kong Financial Secretary John Tsang said at a briefing yesterday.
The Hong Kong Monetary Authority also tightened mortgage terms for commercial properties and parking spaces.
The government widened its property curbs to cover commercial transactions after earlier this week hundreds of people turned up to buy hotel rooms being sold by Li Ka-shing's Cheung Kong (Holdings) Ltd in the city, prompting a warning from the government. Home prices have doubled in the past four years on near-record low mortgage rates, an influx of Chinese mainland buyers and a lack of new supply.
"This again shows the government's determination to curb prices," said Thomas Lam, head of research for China at Knight Frank LLP. "It will affect the luxury residential sector and also investors of buildings and commercial properties."
The value of retail shop transactions rose 78 percent from a year earlier to HK$85 billion in 2012, as curbs on home prices prompted investors to seek other properties, according to Centaline Property Agency Ltd, the city's biggest closely held realtor. That's the highest since at least 1996, when the realtor began collecting data.
Under the new rules, Hong Kong property deals below HK$2 million will incur stamp duty of 1.5 percent of the purchase price, from HK$100. The tax for those over HK$2 million will be raised to as much as 8.5 percent from 4.25 percent, Tsang said.
The measures take effect today, and local permanent residents who don't own homes will be exempted.
Prices of offices rose 23 percent, while those of retail spaces advanced 39 percent in 2012, Tsang said.
Hong Kong has the world's highest shop rents and is the world's second-most expensive place to rent office space, according to property brokerages, including CBRE Group Inc.
