(Bloomberg) -- Hong Kong leader John Lee’s potential plan to ease property taxes for non-residents is likely to stabilize the housing market without stimulating prices that are being stunted by rising interest rates.

The city’s chief executive may relax the stamp duty for non-resident property buyers as part of measures to attract foreign talent to be announced in his maiden policy address later this month, Bloomberg News reported on Thursday. 

Lifting the levy could steady home prices in the fourth quarter but is unlikely to propel price growth, said Sammy Po, CEO of Midland Realty International Ltd.’s home division. 

“We don’t see any drivers for prices because we are in a rising interest-rate environment still,” Po said. “Also, as long as Hong Kong keeps certain travel curbs in place, the economy can’t improve much.”

Hong Kong’s property market — one of the world’s most expensive — has been slumping due to rising rates and a population outflow. Secondary home prices have fallen 8% since the start of the year and are on track to approach a five-year-low. Goldman Sachs Group Inc. expects home prices to plunge 30% through 2023 from last year’s levels. 

Potential easing or lowering of stamp-duty rates for non-local buyers could attract demand, particularly from mainland Chinese interested in luxury residential properties, said Patrick Wong, a real estate analyst with Bloomberg Intelligence. The impact on sales of mass residential projects could be limited until there is more clarity on how high mortgage rates could go, he added.

Hong Kong developer stocks rose after the report. Sun Hung Kai Properties Ltd. climbed 1.9%, erasing earlier declines. New World Development Co. jumped as much as 3%, while CK Asset Holdings Ltd. and Henderson Land Development Co. also gained. 

Buyers who aren’t permanent residents are currently subject to a stamp duty of 30% of home prices, while domestic buyers who already own residential properties in Hong Kong pay a rate of 15%.

There were 493 residential transactions — just 1.5% of the total — subject to the buyer’s stamp duty in the first eight months of 2022, according to Bloomberg Intelligence. The average sale price of those homes was HK$16.5 million ($2.1 million), a value corresponding to relatively upscale homes.

Hong Kong’s lawmakers have been urging the government to introduce measures to attract foreign talent, including property tax cuts. Regina Ip, convener of the government’s advisory Executive Council, floated the idea during an interview with Bloomberg Television in August. Her comment triggered a surge in local developers’ shares before the government said it had no plan to lower the tax.

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