Judging by the robust post-stimulus home sales in Hong Kong over the weekend, analysts agree higher loan financing and cheaper borrowing costs have helped lift buying sentiment. The government can certainly dig deeper into its toolbox for reinforcement, if needed.
CK Asset Holdings and MTR Corp sold more than 80 per cent of the 248 flats on offer at their Blue Coast II project in Wong Chuk Hang as of early Sunday, according to property agents. Sun Hung Kai Properties found buyers for 215 of the 256 flats on sale at Cullinan Sky Phase 2 in Kai Tak, they estimated.
Other previously-launched developments also recorded brisk business, including 39 units in projects such as Koko Mare, Belgravia Place and Henley Park on Saturday. With primary transactions already exceeding 400 this weekend, new home sales this month are set to surpass the 515 transactions in September.
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Banks in Hong Kong cut their prime lending rate by a quarter point last month, following the first easing move by the Federal Reserve in this policy cycle. The government has also eased mortgage rules to pre-2009 levels, delivering a stronger pill to stop a three-year rot in the local property market.
“The impact from the mortgage relaxation measures will take time to be reflected” in the industry, said Buggle Lau Ka-fai, chief analyst at Midland Realty. “If the government wants, there are some other measures [to rescue the market]. But the most important thing is to boost the economy.”
They may include allowing the maximum loan-to-value ratio of 90 per cent for properties valued up to HK$12 million, from the current ceiling of HK$10 million, according to Cathie Chung, senior director of research at JLL. This tweak could stimulate demand in the middle segment and induce demand for upgrade, she added.
Another way is to reallocate some subsidised flats to the public rental housing programme. Limiting the supply of these flats in the market could prevent “market cannibalisation” and thus help stabilise prices in the private residential sector, Chung said.
The Housing Authority announced in August that 7,132 flats under the Home Ownership Scheme will be put up for sale in this fiscal year. The flats located in Kai Tak, Yau Tong, Tung Chung and Tuen Mun will have prices from HK$1.43 million to HK$4.67 million, a 30 per cent discount to current assessed market values.
Hong Kong could also adopt a more strategic scheduling of land sale to avoid further worsening of the supply glut, said Hannah Jeong, head of valuation and advisory services, CBRE Hong Kong.
Shifting the focus from traditional housing demand to other housing options such as senior living and dedicated student accommodation could also be considered, said Kathy Lee, head of research at Colliers.
“If the current strategies do not yield the desired recovery, further relaxing planning regulation to expedite housing development could be pursued,” Lee said. “Hong Kong’s housing demand is becoming increasingly diverse due to demographic shifts, necessitating a wider range of housing options beyond traditional ownership models.”
It may be too early to trigger those “rescue” options. The first week of post-stimulus sales has been quite encouraging, according to Sammy Po Siu-ming, CEO of Midland Realty’s residential division.
“Most units in new residential projects that launched this weekend were sold,” he said, putting his estimate at 550 deals. “It’s a significant increase from September, with the total for October expected to reach around 3,000 transactions” versus 515 in September, he added.
Based on this momentum, total transactions this year will improve on the unwanted records set in the past two years. Sales of new flats totalled 10,650 in 2023 and 10,243 units in 2022, the worst years since the government collected data in 1997. Home prices fell 26.6 per cent from their peak in 2021, while offices, factories and retail premises slumped by 11.8 per cent to 17.5 per cent.
Financial Secretary Paul Chan Mo-po on Thursday said the government’s step to raise mortgage financing limits will help trigger a “positive expectation” in the market in Hong Kong.
Midland Realty estimates that 5,000 new units could be made available to homebuyers this quarter, or nearly half of the 10,600 flats launched from January to September this year, Lau, the firm’s chief analyst, said. That could drive full-year primary deals to a three-year high of 16,000 in 2024, he added. Prices could recover by about 3 per cent this quarter, Midland forecasts.
More developers are looking to make sales as well. Chinachem Group is set to sell 50 of the 198 units at its Echo House project in Cheung Sha Wan, according to Midland. Hang Lung Properties will launch eight new units in The Aperture project in Kowloon Bay.
“We are seeing signs of a bottoming out in the Hong Kong property sector,” said Kenny Ho, managing partner at wealth manager Carret Private Capital.”
Additional reporting by Aileen Chuang
More from South China Morning Post:
- Hong Kong mortgage tweak creates ‘positive expectation’ in property market: Paul Chan
- Hong Kong’s monetary authority eases mortgage lending restrictions to jump-start market
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