Invest in Hong Kong property now, say analysts, as coronavirus lockdown keeps foreign and mainland buyers away – before the post-pandemic market rebound

Jul 14, 2020

With no visitors coming into Hong Kong, the pool of potential buyers is restricted to locals. Photo: Dickson Lee

First-time buyers, listen up – Carrie Lam’s recent easing of mortgage restrictions, coupled with the disappearance of foreign investors during lockdown, mean it’s a buyer’s market for the first time in years – but act quick, as the experiences of Sars and the 2008 financial crisis predict a sudden bounce back when the world opens up again

For aspiring first-home buyers trying to scrape together a deposit in Hong Kong's impossibly expensive housing market, the easing of mortgage restrictions late last year might have seemed like welcome news.

Under the changes announced by Chief Executive Carrie Lam last October, first-time buyers can borrow up to 90 per cent of the value of a property worth up to HK$8 million (US$1.03 million) – up from HK$4 million (US$516,000) previously – or 80 per cent for eligible flats valued at up to HK$10 million (US$1.29 million).

Noting other factors in their favour, Chris Liem, owner and principal at Engel & Volkers Hong Kong, reckons those who are ready to embark on first-home ownership should make their move now.

“Before when the market was really bullish, it was a seller's market. Now, it's a buyer's market,” he explains. “I feel the market will recover very quickly, so for first-time buyers, now is the time to get in.”

He has seen the market bounce back quickly after Sars in 2003 and the financial crisis of 2008, and he expects the same post-Covid-19.

“It's already started,” Liem asserts, noting a 45.9 per cent month-on-month jump in residential transaction volumes in May, according to Land Registry data.

Residential buildings in the Yau Tong area, east Kowloon, Hong Kong, where deals can now be had. Photo: SCMP/Sun Yeung

While the opportunity for a bargain may have passed (Liem says that time was two or three months ago), motivated vendors are still there so he advises having a skilled negotiator go to bat for you. That first home need not be your “forever” home, and Liem believes it's always better to get a foothold as soon as you are able and start to build equity.

In order to make a tidy profit, be prepared to stay there for five to seven years, Liem advises. A newer, smaller flat will “always” be easier to sell than, say, an older walk-up, but since you're going to be living there, personal preference should be factored in, too. “It really comes down to what your motivations are,” he says.

It's possible to buy new in a good location – for example, flats in Central 8, Emperor Group's new development in Mosque Street, Mid-Levels, are advertised from HK$5.30 million (US$684,000), albeit for a tiny 181 square feet (16.8 square metres).

Among the incentives developers are offering to first-home buyers at the moment, vendor finance is an option worth considering, Liem adds.