Investment in Hong Kong begins to slow
Investment from mainland China has started to slow down, as interest in luxury residential property in Hong Kong declines. It is estimated that a staggering 15.8 per cent of the money currently changing hands in the sector comes from just over the border. Although, an increasing number of local Hong Kong buyers had been buying up luxury homes, diluting the market share of mainland buyers in sales and value.
The renminbi weakened 0.6 per cent against the Hong Kong dollar in the third quarter, extending a trend that’s seen it deteriorating 4.6 per cent in the 12 months to September, making the city’s property more expensive in yuan terms.
Back in 2012 when the Hong Kong market was gathering pace, there was much displeasure from local people, as they watched the prices sky rocket fuelled by aggressive overseas bidding. Today, much of the city has become unaffordable for local people, and much of the luxury property is occupied by wealth expats, working in the financial sector.
In attempts to bring further control over the market, the government has now doubled the stamp duty for second-time and corporate buyers. Mainland Chinese buyers will be subject to 30 per cent stamp duty, from the previous 23.5 per cent. Following the announcement on November 5th, prices did begin to fall.
To keep the market moving, some sellers have been forced to offer significant discounts, with reports of HK$3 million discounts on some of the high-end developments. Larger developers have offered to foot the bill and absorb any additional stamp duty incurred on new purchases. It seems the developers will do what it takes to keep the high Hong Kong prices going.