Hong Kong mulls tighter curbs on foreign home purchases

Non-local buyers took up over 10% of total transactions in Q1.

The government is reportedly considering more stringent restrictions on home purchases by non-locals amidst rising concerns that foreigners can evade the 30% stamp duty despite worsening housing affordability.

Also read: Waiting time for public housing hits 18-year high

Transactions by non-local and companies accounted for a measly 1.2% of total purchases in the first half of 2018, permanent secretary for transport and housing Stanley Ying was quoted in local media reports. “Government will keep on monitoring the situation, and will roll out measures when necessary without notice,” the journal cited Ying as saying.

However, Centaline Property estimates that non-local buyers actually took up over 10% of total transactions in the private housing market in Q1.

“Though the government has unveiled a raft of housing cooling measures to tame foreign demand, non-local buyers could still avoid the 30% stamp duty as some developers offer to pay for them or they buy the property via a trust,” OCBC Treasury Research said in a report.

Also read: Vacancy tax may not dampen Hong Kong's runaway residential prices

If the proportion of non-local buyers and housing prices remain high, OCBC expects the government to start moving to curb foreign home-buying activity.

Tighter restrictions against foreign home purchases have been felt across the region with Australia, Singapore and New Zealand rolling out measures from stamp duties, restrictions and limits in an effort to curb foreign property purchases.

Malaysia was the latest to join the property clampdown after prime minister Mahathir Mohamad describe the Chinese-backed US$100b Forest City development as ‘built for foreigners’ and beyond the reach of ordinary Malaysians.

“The tension around foreign investment is always going to be more acute when affordability is getting worse,” Brendan Coates, a Melbourne-based researcher at Grattan Institute told Bloomberg.

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