The number of properties sold in Hong Kong fell by more than a third last year to a 17-year low as a surge in sales tax, designed to burst a price bubble, turned off buyers in one of the world’s most expensive cities.
Despite steep discounts offered by the city’s influential property developers, the total number of sale and purchase agreements concluded in 2013 was 70,503, down 39% from 2012, according to the Hong Kong Land Registry.
The value of deals dropped 30% from a year earlier to HK$456bil (US$59bil) and forecasters expect the downturn to continue this year.
With local tycoons like Li Ka-shing warning of the impact on his property business last year, in November Deutsche Bank said Hong Kong home prices could drop up to 50% over the following 12 months.
Last February’s doubling of stamp duty, or tax, on residential transactions to as much as 8.5% of the sale value was designed to prick the city’s property bubble.
But it has yet to stop the price of homes creeping up: according to property services firm Centaline Property, overall home prices edged up 3% for the year, and have jumped 120% since 2008.
That could change soon, making life tougher for the property development industry.
