Hong Kong buyers rush to snap up homes after curbs removed
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Hong Kong dropped all property market curbs in late February in a bid to boost buyer sentiment.
PHOTO: AFP
HONG KONG – Mr Ray Yuen waited for months for someone to buy his Hong Kong home so he could upgrade to a bigger one for his family. But there were barely any offers, and the ones he received were ridiculously low.
Then everything happened very quickly. Soon after Financial Secretary Paul Chan announced the removal of all extra property levies last week, Mr Yuen’s 340 sq ft apartment got a lot more viewings. By March 2, he sold it with a small discount that he found acceptable. The next day, he signed the contract to buy another property.
“The market is much more active now,” said Mr Yuen, who works in marketing. “We worried that the prices will bounce back later this year so we decided to buy as quickly as possible.”
His experience epitomises the dramatic rebound in sales in Hong Kong’s residential market. Buyers who had been waiting on the sidelines, deterred by high borrowing costs, rushed in on the expectation that prices would rebound after the policy change.
Hong Kong’s new home sales surged
Henderson Land Development’s Belgravia Place project in Kowloon sold all 138 units available in just four hours on March 3.
The second-hand market is also picking up. The city’s 10 biggest estates saw transactions jump to the highest in more than a year over the weekend.
Foreign buyers and existing home owners no longer have to pay the respective 15 per cent and 7.5 per cent levies on transactions. Instead, everyone is subject to the regular rate capped at 4.25 per cent.
The urgency for some buyers to snap up homes is guided by past experiences with Hong Kong’s property market.
Back in 2009, Mr Yuen offloaded a home but did not buy another, missing out on the start of a decade-long bull run that was driven by ultra-low interest rates. “I didn’t think prices could keep rising and rising,” he said. “I couldn’t keep up.”
He eventually re-entered the market in 2013 with the purchase of a smaller apartment. So this time around, he felt he had to act fast.
Locals familiar with the market are not the only eager buyers. Demand is also coming from non-residents, now that they are no longer subject to additional taxes.
For mainland Chinese in particular, Hong Kong is now an attractive place to invest in properties given that other overseas cities charge foreign buyers steeper taxes, said Mr Bryan Lai, an agent with Centaline Property Agency in the Sheung Shui area close to Shenzhen.
He brokered a purchase for a mainland client last weekend.
“She was very excited when I told her about the news” that the curbs had been removed, he said.
“She visited the apartment on Sunday afternoon and by evening the same day, she decided to buy.”
The client is currently renting in the area and finds the lower tax rate a compelling reason to buy, said Mr Lai.
The unit was sold 13 per cent below the asking price.
Still, analysts are less optimistic than buyers that home values will rebound any time soon.
“Although the recent relaxation of property cooling measures may stimulate demand, high interest rates and abundant near-term supply will cloud the recovery of Hong Kong’s home prices,” S&P Global Ratings credit analyst Wilson Ling wrote on March 6.
Average mortgage rates hit almost 4 per cent in November, compared with less than 2 per cent in mid-2022, data from mReferral Mortgage Brokerage Services shows.
There is a potential new-home supply of 109,000 units, according to Jones Lang LaSalle.
Supply in the secondary home market is also expected to rise, after the government scrapped a duty on sellers who offload their properties within two years, further weighing on the market.
But to some, now is a good time to buy.
“People are in a rush,” said Mr Yuen. “The fact that home prices have fallen so much from the peak has presented an opportunity to enter the market.” BLOOMBERG
