Hong Kong is renewing a push to alleviate the city’s deep-seated housing and land issues as the city’s 2023-24 Budget announced measures like lowering the tax rate for first-time homebuyers and a vast spending plan for cheaper public rental units on Wednesday.
The adjustment in ad valorem tax, which will take effect immediately, aims to ease the burden on ordinary families purchasing their first residential properties, particularly small and medium-sized residential units, Financial Secretary Paul Chan Mo-po said in his budget speech.
“Last year, more than 90 percent of buyers of residential properties were first-time buyers,” Chan said, noting that the proposal could benefit 37,000 buyers and cost the government around HK$1.9 billion ($242 million) per year.
Taking an apartment valued at HK$8 million as an example, with the new measures, the tax rate for first-time buyers will be cut from 3.75 percent to 3 percent. That means the homebuyer can save HK$60,000. The tax regime for such buyers differs according to the value of the properties.
Chan said the reduction in stamp duty was issued as no adjustments have been made to the value bands of the ad valorem stamp duty payable for the sale and purchase or transfer of residential and non-residential properties since 2010.
However, current demand-side management measures for residential properties, commonly known as “harsh measures”, remain unchanged.
In his budget announcement, Chan also said the Land Sale Programme this year will cover 12 residential sites. The potential land supply for the whole year is expected to have capacity for providing about 20,550 units, 60 percent more than the annual demand of 12,900 units projected in the Long Term Housing Strategy. The Land Sale Programme also includes three commercial sites and three industrial sites, capable of providing about 200,000 square meters of commercial floor area and 170,000 square meters of industrial floor area respectively.
“We will secure land of a scale nearly double that of the previous five-year period for the production of no less than 72,000 private housing units in the coming five years, and make the land available to the market through the Land Sale Programme and railway property developments,” Chan said.
Meanwhile, the budget has earmarked HK$26.44 billion to build around 30,000 Light Public Housing units in the coming five years, among which HK$14.9 billion was allocated to the first batch of projects starting this year.
The project is among a raft of housing policies introduced by Chief Executive John Lee Ka-chiu in his maiden Policy Address released last October. Adopting a standardized simple design and modular integrated construction approach for speed, the Light Public Housing units will feature the basic facilities of traditional public housing flats but charge lower rent.
The government of the Hong Kong Special Administrative Region said it expects the project to help cut the waiting period for public housing to 4.5 years from 5.6 years.
Chiu Kam-kuen, international director and chief executive of Cushman & Wakefield Greater China, said the construction of Light Public Housing could fill the short-term gap in public housing supply, and suggested the government publish a clear timeline for land recovery and consider putting some of the light public housing sites on the land requisition list.
“This will convey a clear message to the market that the sites currently planned for the light public housing are only temporary, thereby giving the public confidence that the sites will be put back on the market again in the near future,” Chiu said.
Jason Leung Yeuk-ho, a researcher at Our Hong Kong Foundation, said this year’s budget shows the government’s continued actions to build capacity in terms of land and housing supply in the face of market fluctuations, though there are not many new policies.
Leung said land supply in the next five years will soon be in the “harvest period” for new development areas, but the key is still to implement infrastructure-led initiatives and enhance the efficiency of the development process.