Government mulls tax on vacant properties to boost home supply

Home ownership in Hong Kong has plunged to alarmingly low levels.

Chief Executive Carrie Lam said that the government is studying the feasibility of introducing a tax on vacant first-hand private residential properties.

The vacancy tax will help release residential units into the market to increase supply in Hong Kong’s home short market.

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Home ownership in Hong Kong has plunged to alarming rates below 50% which perhaps reflects the growing unaffordability of homes in the world’s most expensive housing market.

The number of Hong Kongers who own the spaces they occupy peaked at 54.3% in 2004 but has been on a steady decline since 2011 to hit an all time low at 49.2% in 2017, representing its weakest showing since 1999. Contrast this with Singapore where home ownership rates exceed 90%.

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CE Lam said that the government will consider the rationale, feasibility and public response before finalising its decision on the vacancy tax. She added that there is no plan to roll out a value-added tax on residential properties owned by non-residents.