Hong Kong’s finance minister signals end to 10 years of real estate regulations

This is the first regulatory relaxation since the HKMA introduced measures in 2009 to reduce potential risks to financial stability from an overheated property market.

Despite the July policy, continued interest rate increases prompted banks to raise mortgage rates, causing house prices to fall and hurting demand.

HSBC last week predicted house prices would fall by 5% in the first half of next year, before stabilizing in the second half.

Mr Chan said when the government first introduced administrative measures to increase housing supply starting in 2010, it had to curb real estate speculation and investment demand.

This control measure was aimed at increasing housing supply over the short to long term.

“We noticed that property prices fell by about 15% last year and recovered by about 2% by the end of July this year,” he said.

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According to an index compiled by the Rating and Evaluation Bureau, residential home prices in August fell by 1.4% from the previous month, marking the fourth consecutive month of decline.

Louis Long Hongbiu, executive director of the Hong Kong Real Estate Developers Association, welcomed Mr Chan’s comments that market conditions were different from before and called on the government to remove all restrictions.

“While I appreciate the government’s cautious approach to reining in the real estate market, I am concerned that excessive caution could backfire and spark a new crisis,” he said.

Sammy Poh Siu-ming, CEO of Midland Realty’s Hong Kong and Macau residential division, said Mr Chan’s message showed the government was ready to give the green light to ease cooling measures. .

“If the government does not withdraw the measures, we expect real estate prices to come under pressure in the fourth quarter, potentially resulting in a 3% decline in prices,” Poe said.

“If certain measures, such as double stamp duty or buyer stamp duty, that limit the purchasing power of non-residents or reduce constraints on local residents purchasing additional property, could be eased, I think volumes will increase immediately without causing a huge spike, as rising interest rates will constrain prices. ”

Hong Kong house prices turn around as interest rates likely peak: analyst

Real estate consultancy JLL said on Wednesday that the year-to-date rise in house prices will be offset by recent declines by the end of September, predicting that the number of negative equity mortgages will exceed 10,000 by the end of this month. He said there was. .

JLL Hong Kong chairman Joseph Tsang told the Post that falling property prices were a threat to the banking sector and the local economy, and the government should remove all curbs.

“Even if all measures are lifted, real estate prices will not stop falling. The market will just hit a soft landing,” he said.

“In any case, I don’t think the government will be aggressive enough to abandon all measures.”

Mr Tsang said the government should consider adjusting buyers’ stamp duty for non-local residents. Residents of mainland China must pay a 30% tax on home purchases in Hong Kong, which is double the tax locals pay on second properties.

He said the rapid rise in mortgage rates over the past few months was unexpected.

Mr Tsang also said the HKMA should lower the standards for bank pressure tests in mortgage lending.

Chan returned on Wednesday after leading a 130-person trade delegation to Europe, the largest since the outbreak of the coronavirus pandemic in 2020.

His 10-day trip also included stops in France, Britain and Germany as part of a broader effort to propel Hong Kong to the top as a business destination after a period of political tension.

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Last Saturday, during a visit to London, Chan announced that AstraZeneca, the world’s leading pharmaceutical company, plans to set up a research and development center in Hong Kong.

Mr. Chan’s first port of call was Paris, where he met with local government officials and business leaders from the lifestyle and health technology sectors, as well as the cultural and creative industries.

Mr Chan said on Wednesday that the visit had achieved its purpose, adding that it would be more effective to promote Hong Kong directly to foreign companies amid “misleading reports” by Western media.

“We had the opportunity to introduce Hong Kong first-hand and provide objective context and data in answering their questions,” he said.

“They have also expressed interest in using Hong Kong as a springboard to expand into the Greater Bay Area and other Asian markets amid the global economic downturn.”

Chan said French companies specializing in energy and wastewater treatment have also expressed interest in expanding operations in the city.