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Hong Kong property sales fall to 17-year low as tax hike bites
January 7, 2014 / 4:46 AM / 4 years ago

Hong Kong property sales fall to 17-year low as tax hike bites

HONG KONG, Jan 7 (Reuters) - The number of properties sold in Hong Kong fell by more than a third last year to a 17-year low as a drastic increase in tax on home sales, introduced to tackle rising prices, easily outweighed discounts offered by the city’s property developers.

The total number of sale and purchase agreements concluded in 2013 was 70,503, down 39 percent from 2012’s level, according to the Hong Kong Land Registry. The value of deals dropped 30 percent from a year earlier to HK$456 billion ($59 billion).

Forecasters expect the downturn to continue this year. With tycoons like Li Ka-shing warning of the impact on his property business, in November Deutsche Bank said Hong Kong home prices could drop up to 50 percent over the following 12 months.

Designed to burst the city’s long-term property price bubble, last February’s doubling of stamp duty on residential transactions to as much as 8.5 percent of the sale value has yet to stop the price of homes creeping up. According to property service firm Centaline Property, overall home prices edged up 3 percent for the year, and have jumped 120 percent since 2008.

But in a reflection on the scale of last year’s slowdown, last November tycoon Li, who owns property company Cheung Kong (Holdings) Ltd, said his business had suffered its worst year in more than a decade.

Major rival Sun Hung Kais Properties Ltd in September posted a 14 percent fall in full-year underlying profit for 2013, trailing forecasts and marking its first drop in annual earnings due to slow sales in Hong Kong.

Prices in the former British colony are among the highest in the world. While Hong Kong first began taking steps to cool property prices in October 2009, no real impact had been seen until the February increase in stamp duty on residential transactions.

$1 = 7.7547 Hong Kong dollars Reporting By Yimou Lee; Editing by Anne Marie Roantree and Kenneth Maxwell

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