Why home prices in Hong Kong won’t rebound despite the removal of property curbs
- The measures withdrawn include stamp duties that targeted non-permanent residents and second-time buyers
- Hong Kong’s monetary authority also relaxed the city’s lending policies on Wednesday, offering more mortgage loans to bolster the city’s sluggish real estate industry
Hong Kong has scrapped all its decade-old property market curbs in a drastic bid to revive the ailing sector, after the city’s home prices fell for nine straight months dragging the official home price index down to a seven-year low.
Analysts say these measures are unlikely to trigger a rebound in prices, as the prevailing weakness has been due to elevated borrowing costs, a sluggish economy, and a bloated supply pipeline. Still, they expect the price decline to slow down and transaction volumes to rise, while encouraging property developers to put more projects on the market as a result of Wednesday’s announcement.
“We have been closely monitoring the situation in the residential property market,” said Financial Secretary Paul Chan Mo-po in his budget speech on Wednesday. “After careful consideration of the current overall situation, we have decided to revoke all residential property demand management measures with immediate effect.
“We consider that the relevant measures are no longer necessary amid the current economic and market conditions.”
The measures withdrawn include Buyer’s Stamp Duty (BSD) that targeted non-permanent residents and a New Residential Stamp Duty (NRSD) for second-time purchasers. Also, homeowners will no longer be required to pay a Special Stamp Duty (SSD) if they sell within two years.
Joseph Tsang, chairman of JLL in Hong Kong, expects home sales to increase significantly by 10 to 15 per cent in 2024 as a result of these measures. He also foresees a slowdown in the pace of decline in property prices leading to market stability.