Hong Kong's easing of mortgage rules boosts home visitors, but not deals

Henderson Land Development Co

10/07/2023 11:17

By Clare Jim
       HONG KONG, July 10 (Reuters) - Hong Kong's move to raise
the maximum mortgages available to  some homebuyers, its first
relaxation in curbs on home purchases adopted in 2009, boosted
shopping interest over the weekend but did little for
transaction volumes, property agents said.
    One of the world's most expensive property markets, the
Asian financial hub raised its cap on the loan-to-value (LTV)
ratio on Friday to 60% to 70% from 50%, for properties worth up
to HK$30 million ($3.8 million).
    Aimed at helping those looking to buy or upgrade homes for
their own use, the step drove up visitors to new home launches
and existing homes by 20% to 30% during the past weekend
compared to the previous week, said Louis Chan, Asia Pacific
vice chairman of Centaline Property Agency. 
    "However the buyers would not react so quickly, because the
economy is still not good," Chan added, citing uncertainty over
the prospect of interest rate hikes. 
    Chan said 75% of existing transactions are worth HK$10
million or less, featuring small-sized apartments, so the new
measure would help only about a fifth of the transactions.    
    After home prices dropped 15% last year, market participants
urged the government to relax property curbs with measures such
as scrapping extra stamp duties for second-time homebuyers and
non-citizens. 
    But the government has no intention to relax more measures
after Friday's move, Financial Secretary Paul Chan has
reiterated.
    With property prices still relatively high amid a housing
shortage, it was not an appropriate time for more adjustments,
Chan said on Saturday.
    Stock market reaction to the easing was muted on Monday,
with the majority of property developers rising less than 1%, in
line with a gain of 0.6% gain in the benchmark index  .HSI .
    Sun Hung Kai Properties  0016.HK  and New World Development
 0017.HK , eased 1.6% and 1% respectively, however.
    Setting a limit on higher transaction volumes is an existing
stress test on the repayment ability of borrowers, which has not
been relaxed, said Alvin Cheung, associate director of
Prudential Brokerage Ltd.
    Property agents in the former British colony say a borrower
needs a monthly income in excess of HK$100,000 in order to
borrow 60% of a home purchase price of HK$30 million.
    "To improve the property market you can't just loosen one
measure, you need a basket of relaxations," Cheung said, adding
that people were usually reluctant to borrow more at times of
rising interest rates.
    But many developers welcomed the government move. Henderson
Land  0012.HK  said it facilitated property trading
for homebuyers, while Asia Standard International  0129.HK  said
it eased some of the burden of down payments.
    Phileas Kwan, executive director of Asia Standard, which
began selling flats in a new development on Friday, said it had
been 9.4 times oversubscribed over the weekend, with buyers
including newly-weds and home upgraders.
    The company plans to launch more new sales shortly, he
added.

 (Reporting by Clare Jim; Editing by Clarence Fernandez)
 ((clare.jim@thomsonreuters.com;))