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Why China’s tighter grip on outbound capital may test Hong Kong’s housing rebound
The luxury market is under the spotlight as it has been the key driver for the city’s property market recovery this year
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Beijing’s latest efforts to tighten oversight of cross-border capital flows have sparked concerns that a reduction in mainland demand for Hong Kong homes could impact the city’s recovering property market.
The debate follows a series of measures unveiled in recent weeks, including tighter scrutiny of unauthorised offshore brokers and guidelines issued to crack down on illegal cross-border fund-transfer channels.
The move has fuelled fears that mainland residents could face greater hurdles in moving money offshore to purchase Hong Kong property, although some analysts say the impact may be indirect as many mainland-linked buyers already have Hong Kong residency or have established offshore funding channels.
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The luxury market has come under the spotlight as it has been the key driver for the city’s property market recovery this year. However, Citi analysts said in a report on Tuesday that the segment would remain relatively resilient because wealthy buyers typically had access to offshore bank accounts, overseas business income or other established sources of offshore capital.
In contrast, those likely to be most affected were mainland buyers purchasing a single mass-market home, who often lacked Hong Kong dollar income or assets and faced greater scrutiny over foreign-exchange conversion and cross-border remittances, Citi said.
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Mainland Chinese buyers have played a growing role in Hong Kong’s housing market, snapping up properties ranging from private homes to trophy penthouses. In the first four months of the year, transactions from buyers with pinyin names were already equal to more than 40 per cent of last year’s total transactions, Midland data shows.
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