HONG KONG — Hong Kong’s government has lifted curbs on property deals after home prices fell to a seven-year low, adding to the Chinese territory’s woes.
Finance minister Paul Chan announced the move in a speech presenting the territory’s budget, which also raised spending on tourism promotion. He said all curbs, such as extra taxes, imposed earlier to cool the property market would be lifted with immediate effect.
Home prices have fallen for nine consecutive months and share prices have languished as a tightening of freedoms in the former British colony has rattled investors. Meanwhile, Hong Kong’s tourism has not fully rebounded after it reopened to foreign travelers following the COVID-19 pandemic. China’s slowing economy has also impacted Hong Kong’s recovery.
Chan said the limits on property transactions were “no longer necessary amid the current economic and market conditions.”
The government lifted a 15% stamp duty imposed on non-permanent residents who buy property in Hong Kong and a 15% stamp duty charged on purchases of a second property.
Homeowners also no longer must pay a separate duty on sales of homes purchased less than two years before.
Chan said more measures might be taken to ease property lending.
“We consider that there is now room to make further adjustments to the relevant measures and other supervisory policies pertinent to property lending where appropriate, under the premise of maintaining the stability of the banking system,” Chan said.
Last year, the city reduced by half taxes charged on home purchases by non-permanent resident homebuyers and those buying additional properties.
Shares of property developers in Hong Kong jumped after the scrapping of cooling measures was announced. Henderson Land’s shares rose 4.1%, while New World Development’s soared 5.9%. Sun Hung Kai Properties jumped 4.1%.
As an additional tourist attraction, Chan said the city will revamp its light show on scenic Victoria Harbor and stage monthly pyrotechnic and drone shows over the waterfront.
Another $100 million Hong Kong dollars ($12.8 million) will go to promoting big events in the city, highlighting activities like hiking and cycling and creating a new tourism brand to “soft-sell” Hong Kong, he said.
The city also will collaborate with mainland Chinese cities to boost tourism in the Greater Bay Area surrounding Hong Kong.
Mainland Chinese tourists are the majority of visitors to Hong Kong. Over the Lunar New Year holidays, Hong Kong recorded nearly 1.44 million visitors to the city, nearly 90% of them from the mainland.
Britain handed control of Hong Kong back to Beijing in 1997, with an agreement that the territory would be allowed to keep many of its Western style freedoms, such as a separate legal system and freedom of the press, for a half century. However many of those civil liberties have been curtailed with the enforcement of national security legislation following a wave of mass pro-democracy protests in 2019.