Hong Kong agents say property deals jump after big policy moves

Henderson Land Development Co

29/02/2024 07:33

By Clare Jim and Edward Cho
       HONG KONG, Feb 29 (Reuters) - Hong Kong's property
market immediately celebrated the removal of decade-long curbs
with a jump in transactions, property agents said on Thursday,
as authorities made a concerted bid to boost the city's
depressed real estate market.
    Hong Kong, long among the world's most expensive housing
markets, saw prices plunge 20% from their 2021 peak, hurt by the
pandemic, an exodus of residents triggered by Beijing's
imposition of the national security law and interest rate hikes.
    On Wednesday, Hong Kong removed all additional stamp duties,
reversing an unsuccessful government push over the past decade
to cool housing prices.
    The financial hub recorded 28 transactions in the new home
market on Wednesday, compared to 14 the previous day and a daily
average of four to five units last week, while the secondary
market also saw a 50% increase from Tuesday.
    Home sellers also turned bullish, with some raising their
asking prices by 3-5%, according to property agents.    
    "We see the market is reacting positively," Sammy Po, the
residential CEO of Midland Realty  1200.HK , told Reuters.
    "Buyer confidence has generally improved and they have
speeded up their entry into the market."
    The latest relaxations could also attract more second
homebuyers, foreigners and investors, property agents said, as
they no longer need to pay up to 15% of additional stamp duties.
    In a parallel move, the city's de facto central bank on
Wednesday raised the maximum amount homebuyers can borrow for
most purchases to 70% from 50-60% previously, and for investors
to 60% from 50%.
    Shares of Midland  1200.HK  surged as much as 44.6% on
Wednesday, and many realtor branches put up new posters to
celebrate the "historical" day. "Curbs became history; new era
for the property market", one read. 
    The website of Centaline Property Agency, another large
realtor, was temporarily down after the government announcement
due to a surge in traffic.
    "It's a 180-degree change. People who were not interested in
the property market are now also interested," said Louis Chan,
Centaline Asia Pacific vice chairman, adding homeowners were
also keen to check the valuation of their home.
    Recent purchases would focus on small to mid-sized
apartments, the agents expected.
    
    SHORT TERM BOOST
        Some young people, however, said they would wait and see
given lacklustre career prospects, low wage growth and prices
still beyond the reach of many potential first-time buyers.
  
        Home prices in the city rocketed 200% in the decade to
2021, worsening one of the world's most unaffordable markets and
contributing to social dissent that broke out in mass
anti-government protests in 2019.       
    Housing transaction volumes plunged 30% in the last two
years as more residents turned to the rental market, and market
participants said it is essential to see more sales for the
prices to stabilize.   
    Midland expected volumes could surge up to 40% in March,
while major developer Henderson Land  0012.HK  forecast volumes
could rise 30% for the full year.
        Some agents cautioned conditions remain challenging.
    "The negative factors such as high interest rates and a weak
economy still exist and simply withdrawing the measures is not
enough to reverse the downward trend," said Joseph Tsang,
Chairman of JLL in Hong Kong.
        Interest rate cuts and an economic improvement would be
needed for prices to bottom out and rebound, he added.
  
    "There aren't many job opportunities for young people in
Hong Kong right now, and the job market is very limited," said
Kevin Chow, a 25-year-old PHD student. 
    "Coupled with the immense pressure young people face in
affording property, many are relocating to the north in mainland
China or overseas, so I don't think the property market in Hong
Kong will rise again."
($1 = 7.1945 Chinese yuan renminbi)

 (Additional reporting by Joyce Zhou; Editing by James Pomfret
and Lincoln Feast.)
 ((clare.jim@thomsonreuters.com;))