Jones Lang LaSalle boss warns of risky climate for first-time homebuyers

Should first-time homebuyers be encouraged to enter the market now?

For Joseph Tsang, managing director of property consultants Jones Lang LaSalle Hong Kong, the answer is a straightforward no. Not in the present climate.

"Those who entered the market in the past few months were first-time buyers, as the series of property cooling measures introduced by the government had deterred investors and upgraders," said Tsang.

But these buyers were also the most financially vulnerable, paying for their homes with the lowest down payments and requiring the highest loans. "If home prices fall 10 per cent, they will be seriously hit," Tsang added.

"Some could be at risk of negative equity in view of falling home prices as interest rates rise and supply increases. The situation is worrying."

Since October, the government has introduced a 15 per cent additional stamp duty, called buyer's stamp duty, on property purchases by non-permanent-resident and company buyers; increased from two to three years the period during which additional stamp duty, called special stamp duty, is payable on quick resales of property, and raised the rates of those duties; and doubled the stamp duty payable on purchases of all property worth Hk$2 million or more