Macau's new housing tax rules take effect

Macau city view

To regulate the rising residential property market, the government of the Macau Special Administrative Region introduced two new housing tax rules, the new stamp duty tax rule and the revised mortgage-lending rule in February. Under the new stamp duty tax rule, home buyers will be requested to pay 5% of the property value on top of existing taxes for the purchase of a second residential property, while the additional stamp duty will be 10% of the property value for the purchase of a third property and thereafter, plus the vacant residential property tax will also be removed. Meanwhile, young Macau residents buying their first homes can now take out bank loans equivalent to 80 to 90% of the total property value. 

The general consensus is that the aforementioned regulations had been announced too early, which undermined their effectiveness. This saw several developers launch their carefully designed sale strategies simultaneously. Sources indicated that the primary housing transactions jumped to over 1,000 cases in January, and the secondary housing market also gained strong momentum too. Compared to Hong Kong’s 15% stamp duty for a second residential property purchase for investment purposes, Macau’s new 5% stamp duty tax seems insignificant. Due to the current holding costs still being low, the availability of vacant units for sales is viewed with a skeptical eye. Since the pricing power of second-hand properties are still in the hands of property owners, potential home buyers may continue to have difficulty in obtaining desirable properties at reasonable prices.

At this moment, the government’s launch of revised mortgage-lending rule sounds unusual but understandable, given that the city’s home price index had a strong annual rebound of approximately 15% last year from a two-year decline. The index could see another five to 10% increase as the economy is trending up. Young and newly married couples will have the chance to climb up the private property ladder, with a gradual improvement in quality of life through the new scheme. Nonetheless, it is worth noting that the global stock markets have also started to see correction in January. If the adjustment period lasts for more than six months, such small-scale residential property market in Macau may become vulnerable again. 

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