Brokerage CLSA Emerging Markets is confident Shenzhen poses less of a threat to Hong Kong's property market than is often imagined. With residential property prices about a quarter of those in Hong Kong, there have been expectations that people would flood over the border to live and commute to their jobs in the SAR. However, any downward pressure on Hong Kong property prices would be halted as people realised the savings made on housing by moving to Shenzhen were more than wiped out by higher taxes, interest rates and travelling expenses, CLSA head of regional property research John Saunders said. 'Don't be afraid of the border. Low Hong Kong interest rates, high commute costs and tax differences neutralise much of the pricing pressure from Shenzhen,' he said. In a report Bridget Wong's Diary - HK Property and the Shenzhen Effect CLSA compared the costs for a family with a median monthly household income of about HK$18,000 living in Shenzhen with an equivalent family living in Tseung Kwan O. If one member of the household commuted to Central for work, such a household would save only 11 per cent of its household income by living in Shenzhen, according to the report. The study also found that, for some people, it was as cheap to live next to their Hong Kong workplace as to live in Shenzhen and commute. But this was not the case for Hong Kong Island and urban Kowloon, where property prices are higher. Shenzhen's mortgage rates are 3 per cent higher than those in Hong Kong and travel costs 6.5 times higher. A household earning HK$18,000 a month would pay no tax in Hong Kong, but faced a 25 per cent tax in Shenzhen. 'It was not a huge surprise to find that the commute to Central eroded much of the gains of living across the border,' Mr Saunders said. 'What was a surprise, though, was to find that in most other areas in Hong Kong - with the exception of the highly priced Hong Kong Island and urban Kowloon - it was actually as cheap to live in Hong Kong where you work rather than live in Shenzhen and commute.' A Sheung Shui household with an income of HK$18,000 a month, where both parents worked nearby, would save little by moving across the border, the report said. 'They were roughly HK$300 better off per month by commuting from Shenzhen to Hong Kong which is just not enough to really make sense,' Mr Saunders said. The study did not try to place a monetary value on other factors which would influence people's decision on whether to shift across the border - such as the environment and crime rates. Some have argued that, as crossing the border becomes easier, more people may consider living in Shenzhen. The report found that on normal days crossing the border was already efficient, taking only six of the 95-to-105-minute commuting time between Shenzhen and Central. The report's results varied little when different income levels were considered. Higher income earners were less likely to move to Shenzhen due to lower quality of life. Property companies with large land banks in the New Territories are undervalued in light of the study, according to Mr Saunders. Such stocks had been sold down on the basis that property in the New Territories was expected to fall further as more people moved across the border. 'If pricing pressure from Shenzhen real estate seems to be mostly neutralised then this is good for the prospects of a Hong Kong property recovery and so good for developers as a whole,' the report said. As a result CLSA has placed 'buy' recommendations on Henderson Land, Sun Hung Kai Properties and New World Development. Cheung Kong received an 'out-perform' recommendation.