Home prices in Hong Kong ease 0.5% in July – ET RealEstate

HONG KONG: Hong Kong private home prices eased 0.5% in July, the first drop since April, as one of the world’s most expensive property markets continued to be pressured by the coronavirus pandemic and political uncertainties.

The drop in July compares to a revised no change in June. Supported by strong demand and low interest rates, prices have still gained 1.5% so far this year.

The financial centre was hit by a new wave of coronavirus infections in July, pushing housing transaction volumes to a four-month low in August. The real impact on property prices will be reflected in August and September due to a lag effect, agents said.

The market’s recovery was also capped by Beijing’s imposition of a national security law in the Chinese-ruled city on June 30, sparking a fresh exodus among residents.

“The drop is smaller than expected, it’s mainly because large-sized properties have out-performed,” said Thomas Lam, executive director of Knight Frank.

He expected the market correction will continue, citing weak purchasing power in an economic recession.

Realtor Centaline noted the secondary housing market became active again in late August as the pandemic eased in the city.

“Government easing (of) social-distancing measures also provide a positive signal,” it said.



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Hong Kong eases mortgage rules for commercial property – ET RealEstate

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HONG KONG: Hong Kong’s banking regulator said on Wednesday it would relax commercial property mortgage rules, in a move to boost liquidity in a market that has been hit hard by U.S.-China trade tensions, violent street protests last year and the coronavirus crisis.

The change lifts the cap on the loan-to-value ratio for banks providing mortgages for non-residential properties to 50% from 40%, effective Thursday.

Hong Kong Monetary Authority (HKMA) deputy chief executive Arthur Yuen told a press conference the change was designed to make it easier for the commercial sector to obtain mortgages.

Hong Kong’s commercial property market, the most expensive in the world, saw a drop in transactions in the first half, with prices of offices and retail premises dropping 15% and 10% respectively from the second half of 2019, and the pressure is likely to remain, according to HKMA.

“This will have a big psychological impact on the market,” said Dennis Cheng, senior sales director at Ricacorp (C.I.R.) Properties, of the rule change.

He expects a 20-30% rise in transactions in the next month because investors will not be required to put forward as much cash. However, he did not see a rise in prices, because of low rental yield expectations.

The HKMA tightened rules on mortgage loans several times after the financial crisis in 2009, amid a property price boom.

Alex Leung, a senior director of CHFT Advisory & Appraisal, said the relaxation would enable banks to rearrange loans to avoid the liquidation of some property owners, especially smaller investors.



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