Hong Kong’s government raised the stamp duty rate on residential transactions above HK$100 million (US$12.8 million) to 6.5 per cent from 4.25 per cent in its annual budget this Wednesday, amid surging demand from mainland buyers. Analysts say the 2.25 percentage-point increase is unlikely to alter buying behaviour, as structural forces driving mainland Chinese demand outweigh the higher transaction costs. Mainland buyers accounted for about 80 per cent of such HK$100 million-plus deals in the city so far this year.
Hong Kong’s government announced in its annual budget this Wednesday an increase in the stamp duty rate to 6.5 per cent on residential transactions above HK$100 million, up from 4.25 per cent. The measure aims to prevent overheating in the high-end property market, following a sudden rise in large-ticket transactions this year that signals returning confidence.
According to Centaline Property, mainland buyers have accounted for about 80 per cent of deals exceeding HK$100 million in the city so far this year. Property agents say the 2.25 percentage-point hike in transaction costs will not significantly impact demand from mainland Chinese buyers. Analysts from Morgan Stanley and JPMorgan argue that structural forces underpinning this demand, such as wealth transfers and investment diversification, will outweigh the added costs.
“The government saw a sudden increase in large-ticket transactions this year, which signals returning confidence,” said Louis Ho Siu-tong, senior associate director at Centaline Property covering The Peak and the Southern district. “They do not want prices to rise too quickly.”
Institutions like JLL and Water Wisdom Asset Management note that such transactions are concentrated in iconic properties in areas like The Peak and Mid-Levels West, including Mount Nicholson and Swire Properties’ The Legacy project. Financial Secretary Paul Chan highlighted in the budget that the move helps stabilise the market.
Despite the tax increase, analysts expect mainland buyers to continue dominating the luxury home segment, with Beijing’s policies and Hong Kong’s appeal sustaining the momentum.
