The number of mainlanders buying pre-occupied luxury home in Hong Kong dropped to the lowest level in two years between January and March, showing the impact of the mainland's credit tightening on buyer demand.
Data from Centaline Property Agency for second-hand properties worth more than HK$12 million showed mainlanders accounted for 17 per cent of purchases, down from 27.2 per cent in the fourth quarter of last year. The number of mainland buyers peaked in the third quarter of 2011, when they accounted for 28.5 per cent of the market.
In terms of the total value of the market, mainland buyers accounted for 18.4 per cent, far below the peak of 31.7 per cent which was recorded in the fourth quarter of last year.
'We've seen mainland buyers struggling to obtain mortgage finance to buy homes in Hong Kong since the fourth quarter of last year because China has tightening lending,' said Louis Chan Wing- kit, managing director of Centaline's residential unit. He said the Hong Kong government measures to make it easier for banks to see if a borrower was overstretched also meant it was harder for mainland buyers to raise cash in Hong Kong.
Chan also expects recent stock market volatility to reduce the number of mainland buyers in Hong Kong.
The decision of the People's Bank of China to cut the amount of cash that banks must set aside as reserves would not help mainland buyers, said David Ng Ka-chun, head of China and Hong Kong property research at Macquarie Capital Securities. He said it would only benefit first-time buyers.
'It won't benefit mainland buyers who plan to buy homes in Hong Kong. Also, the government may have a new housing policy from July. I don't think mainland buyers in the Hong Kong market will be as active as before.'
He expects luxury-flat prices to rise more slowly given the drop in mainland buyers.
'I don't think second-hand luxury flat prices will drop this year. They will be flat or even rise slightly. But prices for mass residential housing will drop 5 to 10 per cent this year,' Ng said, referring to both new and second-hand properties.
Special stamp duty imposed 18 months ago to deter quick resales of homes had also deterred mainland investors, said Marco Yu, a director at Centaline. 'There are fewer flats available for sale because many owners don't want to pay the special stamp duty,' he said.
Yu said there were still large numbers of mainland buyers in the market for new luxury flats because they liked new housing estates. There were also more new than second-hand luxury flats available.
Centaline's research said about 46.8 per cent of all new luxury flats were bought by mainlanders in the first quarter, up from 42.1 per cent in the fourth quarter of last year. About 47.9 per cent of the total transaction amount was paid by mainlanders.