The Hong Kong government has unveiled its latest budget aimed at easing the financial burdens faced by buyers of lower-value properties with notable adjustments to stamp duty. Announced by Financial Secretary Paul Chan on February 26, 2025, the measures are anticipated to reshape the housing market by allowing more potential homeowners to enter the market, particularly those interested in properties priced below HKD 400,000.
Under the newly introduced plan, the ceiling for properties qualifying for the reduced stamp duty of HKD 100 has been raised from HKD 300,000 to HKD 400,000. This adjustment takes effect immediately, and government projections suggest it will benefit approximately 15% of property transactions. With this policy shift, the government expects to see revenue decline by around HKD 400 million annually. For example, for properties costing HKD 399,000, buyers will now only pay HKD 100 in stamp duty, significantly less than before when the amount stood at HKD 59,850. This reduction provides substantial savings, equipping buyers with additional funds for down payments or emergency reserves.
To strengthen the message of affordability, the budget also outlines reductions for the first quarter of the 2025/26 fiscal year concerning property rates for both residential properties and non-residential properties. This includes exemptions up to HKD 500 for each household, affecting approximately 3.12 million residential properties and around 430,000 non-residential properties. The anticipated total revenue reduction from these measures is approximately HKD 1.5 billion, according to Chan.
The housing sector has seen notable changes over the years, with data showing fluctuations concerning the sales of lower-priced units. Real estate expert Yang Ming-yi from Centaline Property pointed out the historical trends, indicating increased demand for properties costing between HKD 301,000 and HKD 500,000. "We anticipate this change will encourage more transactions, especially among these properties, and is poised to push the market share back to approximately 65%—a level not seen since 2016," he articulated, echoing market sentiments.
Specifically, the move is expected to stimulate secondary market transactions among units priced below HKD 500,000, demonstrating the demand shift as buyers are increasingly drawn toward lower-tier properties. The volume of such contracts saw overwhelming growth, with instances jumping from 2,263 transactions in 2022 to 6,251 transactions just two years later. By 2024, properties priced at or below HKD 500,000 accounted for over 48% of the market transactions, marking significant swings as buyers respond to the adjusted tax structures.
Beyond the immediate effects on the stamp duty, analysts, including Chao Tak-ming, Chief Executive of Centaline Mortgage, also suggest long-term impacts. “This adjustment will help first-time homebuyers and is expected to stimulate transactions of smaller priced units,” Chao emphasized, indicating the extra purchasing power for first-time buyers. This, combined with the government’s recent easing measures on mortgage stress tests and adjustments to the down payment requirements, signifies favorable conditions for new entrants.
Looking at the broader housing supply challenge, the government indicated it will hold off on the sale of commercial land and potentially repurpose some commercial zones for residential use. This includes delaying deadlines for zone conversions to help address the significant housing supply issues plaguing the city. The overall potential land supply is estimated at providing around 13,700 units, aimed at aligning with private housing needs as projected by long-term housing strategies.
The fiscal budget reflects the government’s intent to stabilize the housing market amid fluctuated buyer sentiments during recent years. The immediate and extended impacts of such policies, if they materialize as expected, could push the overall market dynamics toward recovery following challenging periods marked by pricing adjustments and economic pressures.
This budget reflects the constant balance the government seeks between revenue generation and providing needed assistance to its residents, particularly as economic pressures mount and housing remains one of the most pressing issues facing residents today.