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Real Estate Situation

Following national policies to withdraw spicy measures to save property market


Damon Ho

30th September 2023

  Since April of this year, the upper momentum of the property market has decreased. With developers’ low-priced marketing strategy, first-hand sales have been stable, but second-hand transaction volumes have been dropping sharply. Statistics show that the transaction volumes have fallen significantly since the third quarter. There were only about 7,000 cases, down 50% from the 13,000 cases in the second quarter, and transaction prices decreased by 15 to 18% from the highest-level level of this year.

  In view of this situation, middle-class property owners in Hong Kong are all concerned. A typical middle-class who originally hold a private property with a market value of Hk$ 7 million suffers a book value loss of 1million in the market value of his property in the third quarter, and the stock market fell by an average of 25% during the same period. 

   A middle-class family in Hong Kong holds about Hk$2 million in mandatory provident fund and invests Hk $ 1 million in stocks. If they fully hold Link REIT, the value of the stock has declined from Hk$ 50 dollars to thirty-eight per share in the third quarter. The middle-class family will lose a further HK$750,000. The total loss of stock and property investment is HK$1750,000. This loss amounted to 17.5% of the total asset value of a general middle-class family. If a family with a monthly income of Hk $ 50,000, it has lost three years of household income. If each family saves Hk$ 180,000 per year, the savings in the past ten years have been completely wiped out.

  Hong Kong property owners are already in a crisis. If the government withdraws all property spicy measures to rescue the property market, it is still difficult to achieve immediate results. The mainland China has already rescued the market and no longer criticizes speculative activities in the residential market. It also encourages the first-time home buyers to enter the marketplace. Many cities have lifted purchasing restrictions orders against the purchasers. The Hong Kong government should not only reintroduce all the spicy measures but must provide a positive assistant to rescue the market.

  In addition to removing all outdated laws in the property market, the Government should provide preferential policies to encourage people to visit Hong Kong under the talent Admission Scheme to buy property. If most of them are willing to enter the market, they can make up purchasing power which generated by the emigrants. Allowing them to purchase properties at the same rate as locals, the property market will not have to worry about the lack of purchasing power, and the property market will not fall into the abyss.

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1. Shop transactions jumped to a 14-month high 2023-09-30 17:08:02

The number of shop transactions jumped to a 14-month high last month, according to Midland IC&I, although rents in core districts are still seeing a slower recovery.

Deals rose by 36 percent month on month to 106 in August, Midland said, citing consolidated data from the Land Registry.

The total value of the transactions stood at HK$1.74 billion in August, an increase of about 8.3 percent month on month.

2. Evergrande"s founder being investigated 2023-09-30 17:12:54

Hui Ka Yan, the founder and chairman of Chinese property giant Evergrande, was once Asia's richest person.

The 64-year-old, who is also known as Xu Jiayin, rose from a humble upbringing to head a vast business empire. His fortune was estimated at $42.5bn (£34.8bn) when he topped the list of Asia's wealthiest people compiled by Forbes magazine in 2017.

Now he is being investigated over suspected "illegal crimes" as his company teeters under the weight of $300bn (£245.4bn) of debt.

5. Mortgage loans rose by 26.9% in August 2023-10-02 13:48:38

Residential mortgage loans extended in Hong Kong rose by 26.9% in August to HK$35.6b, according to data from the Hong Kong Monetary Authority.

Demand was driven by loans for refinancing, which saw a whopping 86.9% rise to HK$16.6b during the month.

This offset the 19.8% decrease in mortgage loans for financing primary market transactions, to just $4.7b.

Mortgages for financing secondary market transactions, meanwhile, rose 7.6% to HK$14.4b.

6. Retail sales value increased by 13.7% 2023-10-03 09:23:47

The provisionally estimated total retail sales value in Hong Kong increased by 13.7% year-on-year (YoY) in August to reach $32.4b on the back of further growth in visitor arrivals, according to a government spokesman.

In a statement, the Census and Statistics Department said online sales comprised 7.3% of the total retail sales during the period, declining by 9% YoY to $2.4b.

The value of sales of jewellery, watches and clocks, and valuable gifts posted the highest increase with a 57.2% growth, followed by the sales of other consumer goods not elsewhere classified (+23.4%); wearing apparel (+40.0%); commodities in department stores (+14.9%); medicines and cosmetics (+42.9%).

7. BOCHK kicks off a pilot for e-HkD 2023-10-04 11:53:14

Bank of China (Hong Kong) (BOCHK) has begun a pilot for the use of a hypothetical e-HKD to examine the use of e-HKD for prepaid services.

BOCHK onboarded 10 merchants for the pilot, and enabled participants to purchase prepaid service contracts from the merchants through BoC Pay. The funds were converted into hypothetical e-HKD within their personal accounts, which are subsequently managed and operated by smart contracts.

Participants include a group of BOCHK employees. The SMEs participating in the pilot also invited eligible customers to participate.

8. Evergrande has requested to resume trading 2023-10-04 20:59:09

Embattled property giant Evergrande has requested to resume trading of its shares on the Hong Kong Exchanges and Clearing Limited (HKEX).

In a bourse filing, Evergadne said it plans to resume training in HKEXK on 3 October.

Trading in the shares of Evergrande on HKEX has been suspended since 28 September after its Executive Director and Chairman, Hui Ka Yan, underwent investigation due to suspicion of illegal activities.

9. Primary deals hit a new low 2023-10-05 10:44:47

The primary market saw only about 250 deals last month, a new low this year, as developers slowed sales amid concerns over interest rate hikes. The number also marked a 79-percent slump compared with the 1,195 deals seen in August.

Transaction numbers might continue to stay low this month amid expectations of further property purchase limits being eased ahead of the upcoming policy address.

September saw the launch of only one project, Mori in Tuen Mun, as some developers deferred sales amid a dearth of presale approvals.

10. Cheung Sha on Lantau Island is up for tender 2023-10-07 10:03:52

The gov’t has launched the tender for the residential site at Cheung Sha on Lantau Island which will provide a  supply of 110 flats.

The residential site is part of the  Land Sale Programme for the third quarter of this financial year.

In 3Q23, the MTR Corporation will also put up for tender Package One of Tung Chung East Station, expected to provide around 1,200 flats.

Meanwhile, the Urban Renewal Authority (URA) will put up two development projects, one at Kai Tak Road / Sa Po Road and the other at Shing Tak Street / Ma Tau Chung Road. These two projects will provide around 1,450 flats in total.

11. First-time buyers are active in housing market. 2023-10-18 21:38:44

Among those walking through the doors of one Warrington estate agency, it is the buyers - rather than the sellers - who have more of a spring in their step.

"It's definitely a buyers' market at the moment," says Sadia Mian, director of Northwood estate agents.

They are feeling confident enough to "under offer" when making a bid for a property, she says.

This confidence is bred from necessity. People are having to take into account the relatively expensive mortgage repayments they face after buying a home.

Halifax, the UK's biggest mortgage lender, suggests that first-time buyers are still active in the housing market. There is evidence they are now searching for smaller homes in cheaper areas to offset the high cost of a home loan.