HONG KONG (BLOOMBERG) - Property foreclosures in Hong Kong will double from current levels by the end of next year (2016) as a slowing economy hurts borrowers' ability to service their mortgages, according to an auctioneer with 23 years of industry experience.
The average number of foreclosures has risen to 80 a month from about 50 to 60 in the first half of 2015, Mr Tsang Kit-chun, managing director of AA Property Auctioneers Ltd, said in a phone interview on Friday (Dec 11). That is still way slower than the the 6,000-a-month pace in 2003, following a six-year property bear market, he said.
Hong Kong developers including Cheung Kong Property Holdings and Henderson Land Development are offering enticements such as stamp-tax rebates as well as first and second mortgages in an attempt to lure buyers, as some analysts predict prices are on the verge of plunging. Colliers International sees prices dropping 15 per cent in 2016.
Increased foreclosures reflect the eagerness of banks and other financial institutions to call loans when owners cannot afford mortgage payments, Jefferies Group analysts wrote in a Nov 17 note. China's economic slowdown is exerting pressure on businesses, adding risks to Hong Kong's housing market indirectly, analyst Venant Chiang said by e-mail.
Residential properties make up 60 per cent of foreclosed properties, Mr Tsang said.