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Hong Kong property stocks shuddered following an announcement that the government would close a loophole allowing first-time buyers to buy multiple flats while avoiding 15 per cent stamp duty.

The Hong Kong government increased stamp duty to a flat rate of 15 per cent in November from the previous rate of 4.25 per cent in an attempt to cool the city’s property market, while allowing an exemption for first-time buyers. The changes came into effect today.

Local media reported a spike in first-time buyers purchasing more than one flat, with a single buyer snapping up 15 flats for HK$145m ($18m) in a single transaction.

Hong Kong was ranked as the least affordable residential market by in the 2017 Demographia Housing Affordability Survey.

A statement from the government said:

There has been public concern over the recent increase in transactions involving acquisition of multiple residential properties under a single instrument. To prevent local investors from making use of the above exemption arrangement to avoid the payment of New Residential Stamp Duty, the Government decided to tighten up the relevant exemption arrangement.

Shares in developer Sun Hung Kai Properties were down 0.7 per cent, while Cheung Kong Property Holdings rose 1.3 per cent. The city’s benchmark Hang Seng index is down 0.2 per cent.

Rising property prices have been a thorn in the side of outgoing Hong Kong chief executive CY Leung as a series of measures introduced to temper the market failed to have their desired effect.

First-time buyers purchasing more than one residential property will now be subject to the 15 per cent stamp duty rate. The Inland Revenue Department will assess cases of buyers who purchase two flats to be knocked together to a single unit or other similar circumstances.

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