By Venus Wu and Clare Jim
HONG KONG (Reuters) - Hong Kong will raise stamp duties on property transactions for the first time in three years, the latest effort to check an overheated property market buoyed by capital inflows from China.
Hong Kong's real estate is among the most expensive in the world and property experts have forecast that home prices will rise further this year. Skyrocketing property prices have added to growing discontent in the city, with its population already under strain from high living costs and a widening wealth gap.
The government will raise stamp duties on home purchases to 15 percent, across the board, effective Nov. 5, to dampen a red-hot market which has failed to respond to a raft of measures taken by policymakers in recent months.
"We expect the measure to have an immediate and effective cooling impact," Financial Secretary John Tsang told a news conference.
First time local home buyers will be exempt from the latest policy tightening measures with stamp duty ranges remaining from 1.5 percent to 4.25 percent depending on the value, officials said.
Hong Kong home prices surged in September for the sixth consecutive month to hit the highest level in nearly a year, government data showed on Monday.
Soaring property prices this year are in stark contrast to the slowdown in the overall economy, as evident from flagging retail sales and slowing economic growth, and industry officials said renewed mainland purchases had been a key factor behind the rise to escape a depreciating yuan currency.
Chinese investment into Hong Kong properties perked up in recent months both in the primary and the residential market after showing sluggish growth most of last year, according to data from Midland Realty, a real estate agency.
But property analysts expect the measures to have limited impact on prices in the short term.
"Under the current new policy, in the next two months we can expect the transaction volume to drop 20 to 30 percent but this will have limited impact on property prices," said Thomas Lam, senior director at consultancy, Knight Frank.
Another of the city's largest property agencies, Centaline Property Agency Ltd, earlier forecast that home prices would return to peak levels in the fourth quarter this year.
PRICES BECOME EXCITED
Home prices began rebounding in the second quarter and have recently become "excited", said Anthony Cheung Bing-leung, secretary for transport and housing. Transaction volumes in the property market have tripled to 6,000 in the third quarter from the first quarter.
Earlier this week, Hong Kong saw its most expensive land deal this year when a unit of China's HNA Group [HNAIRC.UL] won a plot of residential land for HK$8.8 billion ($1.13 billion), almost double market forecasts.
A sub-index measuring property prices in Hong Kong <.HSNP> is up 10.6 percent so far this year, outpacing a 3.3 percent increase in the broader index <.HSI>.
Hong Kong is not alone in trying to cool prices. China and South Korea also recently rolled out measures to temper property speculation where overheating has raised worries about a bubble.
(Additional reporting by Twinnie Siu, Donny Kwok and Joy Leung; Writing by Saikat Chatterjee; Editing by Jacqueline Wong)