THE Hang Seng Index is expected to test the 10,000-point barrier today, capping a week-long rally led by property stocks. Despite a hard-hitting Hang Seng Bank report predicting the housing market was not likely to recover until next year, several developers' share prices soared to year-highs. The Hang Seng Index (HSI) climbed another 1.4 per cent yesterday to close at 9,939.95 points, bringing the rise since Monday to about 450 points. The latest boost to stock market confidence is said to have been the visit to London by Chinese Foreign Minister Qian Qichen, seen as having improved Sino-British ties and investor confidence about political stability in Hong Kong after 1997. Blue-chip property companies such as Cheung Kong (Holdings) and Great Eagle Holdings hit a year high on local and overseas buying of property counters. Great Eagle rose $1.10 to $20.75 while Cheung Kong was up $1.10 at $43.90. Henderson Land rose $1.40 or 2.9 per cent to $49.60. Hang Seng Bank said in its latest monthly economic report that the residential property market was unlikely to stage any strong recovery in the short-term, due to little expectation of any relaxation in the Government's anti-speculative measures or banks' lending policies. It said deteriorating economic conditions, such as the slowdown in business activities and limited improvements in the unemployment situation, would continue to dampen both prices and transaction activities in the property market. The projected recovery was later than some property consultants expected. Major developers had suggested the rebound would be seen in the last quarter this year. While those unfavourable factors might make it difficult for the property market to revive in the prevailing economic climate, the bank believed housing prices would consolidate at present levels. 'Prices have come down to more affordable levels. While first-time buyers may still have difficulty in purchasing flats in the urban areas, their choices would certainly increase if they considered new towns,'the report said. The burden on home-buyers had eased for several reasons, such as the co-financing schemes offered by property developers, which effectively lifted the mortgage ceiling for new flats to 90 per cent, and favourable bank mortgage terms for buyers in the secondary market, it said. 'These measures have made home purchases more affordable as they help to reduce the mortgage repayment by an average of nine per cent a month. 'As such, the affordability ratio - the ratio of monthly repayment to median household income - for first-time home-buyers has returned to 1992 levels.'
