Editorial | It always pays for investors and home buyers to be prudent
- Rate cuts later this year are likely to boost Hong Kong’s economy and home prices. But for aspiring homebuyers and those looking to upgrade, it is more important that they consider their financial health, not just anticipate market moves
The US Federal Reserve has kept interest rates on hold, but that was enough to spark a rally in major stock markets. American shares have hit new records; even the lacklustre Hong Kong and mainland Chinese markets got a boost. A cut this month was always going to be too optimistic; Fed officials expect three cuts this year, most likely in the second half. Fed chair Jerome Powell said inflation pressures had eased “substantially”, despite a recent improve up in US inflation data.
Markets took that as a dovish message. Japan and Europe have also gained. It helps that the Land of the Rising Sun has finally ended the era of negative interest rates with its first rise since 2007, putting behind it decades of deflation. The Nikkei has lately been on a roll.
Back in Hong Kong, all eyes are on the rate-sensitive property market, which has been in the doldrums since the pandemic, followed by the United States entering a rate-hike cycle in response to global inflation.
The anticipated monetary easing in the US comes as the Hong Kong government scrapped all property cooling measures. The Hong Kong Mortgage Authority also eased measures to allow homes valued at less than HK$30 million to be eligible for a 70 per cent mortgage, up from the previous 60 per cent.
Several major developers are already betting the local property market has “bottomed out” and is on the mend. Sales have gone up in recent weeks, and there are already signs that mainland Chinese buyers are returning to the local real estate market.