Hong Kong and China diverge over home-buying sentiment

While public sentiment about home prices is souring quickly in Hong Kong on concerns about the slowing economy and rising interest rates, a growing number of households in China are expecting prices to rise under the government's supportive measures, surveys showed.

China's economic slowdown weighs heavily on both, but Hong Kong is maintaining curbs enacted since 2012 including heavier stamp duty against non-local buyers, while China's central authorities have been relaxing policies in the past year to stimulate housing demand as part of its efforts to prop up the world's second-biggest economy.

In its latest step, the People's Bank of China on Wednesday lowered the down payment for first-home buyers in all cities except Beijing, Shanghai, Shenzhen, Guangzhou and Sanya to 25 per cent from 30 per cent, just as developers gear up to launch more projects in last ditch bids to hit their annual sales targets.

"We expect more credit stimulus ahead," said Venant Chiang, a property analyst from Jefferies.

Such moves are refuelling housing inflation expectations, as the central bank's latest quarterly survey, released on Wednesday, showed 18.7 per cent of 20,000 households across 50 cities expected home prices in China to increase in the next three months, up from 18.2 per cent in the second quarter and 15.6 per cent in the first quarter.

It outnumbered the 14.4 per cent who expected a home price fall. The majority - 53.3 per cent - projected prices to remain largely unchanged.