Hong Kong will raise stamp duty on residential properties for the first time in three years, aiming to cool an overheated market mainly buoyed by capital inflows from China’s mainland.
Effective Nov. 5, second-home buyers, including both individuals and corporate purchasers, will need to pay a 15% stamp duty across the board, Hong Kong’s chief executive Leung Chun-ying announced on Friday.
This is the second time in three years Hong Kong raised the stamp duty. In February 2013, it doubled the stamp duty from 4.25% to 8.5% for residents. Foreigner buyers are already subject to a 15% stamp duty.
The latest increase in stamp duty, which doesn’t apply to Hong Kong’s permanent residents buying their first homes, is being put into place because home prices have risen much too quickly, Mr. Leung said.
The median home prices in Hong Kong grew for the sixth consecutive month in September, bringing the accumulated increase over nine months to 8.9%, according to government data. Home prices in September were just 3.5% below the peak in the same period last year. Meanwhile, the number of residential sales in September increased 34.4% month-on-month to 7,826, a four-year high.
More:London’s Super Prime Landlords Benefit From Stamp Duty Hikes and Brexit
Chinese Buyers To Take the Hit?
Hong Kong already has one of the most expensive property markets in the world. Some experts have forecast that home prices in Hong Kong will rise further this year, mainly driven by capital inflows from China.
Last month, Bank of America Merrill Lynch noted that Hong Kong is again on Chinese buyers’ radar as home prices skyrocketed in major mainland cities. "More mainland investors might consider buying a second home in Hong Kong for diversification or wealth-protection purposes," analysts said in a research note.
The new stamp duty is likely to affect Chinese investors, said Cliff Tse, regional director of valuation advisory services at JLL, a global real estate consultancy. "The new measure to standardize [the stamp duty] at 15% would affect the demand for second property, in particular for investment purposes," he said.
Write to Fang Block at fang.block@dowjones.com