Property Taxes Push Up House Prices For Investors


Hong Kong and Singapore have firmly cemented their places as the two most expensive housing markets in the world.

Hong Kong is slightly ahead, but the new-build price of a home in both city states lead the rest, mainly due to increased property taxes introduced to rein in runaway price rises.

Both destinations are key target areas for Asia Pacific rim property investors – especially newly wealthy Chinese businessmen.

In Hong Kong, expats can expect to pay 25% tax on buying a home, while Singapore levies a 19.3% purchase tax.

Both mainly comprise extra stamp duty paid by non-residents to discourage expat investors.

Cheaper to run

Hong Kong and Singapore are well ahead of the three other most expensive markets charging extra taxes on top of purchase prices – London charges 7.9%, Sydney 7.2% and the Bahamas 6.5%.

Although purchase costs are higher in Hong Kong and Singapore, annual running costs of a home are cheaper.

Singapore runs out as the 10th most expensive in the world and Hong Kong was 14th.

New York, the Bahamas, Miami, Barbados and Moscow were the top five most expensive cities to run a home.

“The buying price is not the only cost associated with property investment,” said a spokesman for Knight Frank, the global property consultancy which released the figures.

“Purchasers need to think about taxes and stamp duty when buying, and then the ongoing running costs, which may include more taxes, once they have completed the purchase.”

Government cooling measures have seen the level of property sales plunge in the past 12 months.

Sales are down a third, but prices are stable, says the Land Registry.

Off-plan rule change

April proved to be the month with the least sales this year – just 3,427 homes changed hands, the fewest for around a decade.

Knight Frank also identified that 25% of flats sold in the year were valued at HK$5 million or more.

New property laws passed by the Hong Kong government started in June 2013. They allow developers to sell off-plan homes 10 months earlier – up to 30 months before the project completion date.

“We expect that developers will make more apartments available under this scheme in the coming months as they will want to ramp up sales for the second half the year to meet targets. We may see old projects relaunched after they have uprated marketing materials to comply with the new law,” said the Knight Frank spokesman.

So far, the move has had little effect on the market, with just 500 apartments for sale under the new terms.

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