Beijing's curbs hit mainland, HK markets

PUBLISHED : Thursday, 22 July, 2010, 12:00am
UPDATED : Thursday, 22 July, 2010, 12:00am

Beijing's efforts to cool the housing market have dampened Hongkongers' interest in mainland property while tighter credit conditions across the border have hit property purchases in Hong Kong by mainlanders.

Purchases of mainland residential properties by Hongkongers plunged 28 per cent in the first half compared with the same period last year, data compiled by property consultancy Land Power International shows.

Mainlanders' investment in Hong Kong real estate has also been declining as banks tighten lending.

About 7,900 to 8,900 mainland flats were acquired by Hongkongers in the first half of this year, Land Power estimates. The firm specialises in helping Hongkongers buy mainland property.

'Hong Kong people are hesitant to enter the market after the central government introduced measures to cool the red-hot market in April,' Land Power chairman Michael Choi Ngai-min said.

'Meanwhile, the measures that restricted banks lending money to non-mainlanders put financial pressure on some Hong Kong buyers.' Shenzhen remains the most popular city for Hong Kong buyers, but the total number of home purchases by Hongkongers fell to a 10-year low of 2,000 units to 2,200 units. This compared with the 4,000 to 4,200 units in the first half of last year, Choi said.

The decline in buying interest had also hit other major urban areas such as Guangzhou, Shanghai and the Pearl River Delta region, he said.

Meanwhile, mortgage broker mReferral said mainlanders' investment in Hong Kong's real estate market had been slowing.

The percentage of mainlanders who bought luxury homes and arranged mortgages through mReferral fell to 14.05 per cent last month. The ratio was 16.8 per cent in April.

As the credit environment worsened, mainlanders slowed down their buying offshore, Sharmaine Lau Yuen-yuen, mReferral's chief economic analyst, said.

The uncertain policies regarding the Hong Kong housing market had affected mainlanders' interest in the city, she said.

Since April, the central government has issued a series of measures to cool the property market focused on limiting investment demand and increasing the supply of public and low-cost housing.

The measures include an increase in the down payment requirement for second-home purchases to 50 per cent from 40 per cent and the introduction of mortgage rates not lower than 1.1 times the benchmark lending rate.

Banks in cities with excessive property price gains are advised to stop mortgage lending to third-home buyers and to buyers without residence approval.

The central government also approved a plan for a gradual reform of property tax.