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The View | Ending cooling measures no game changer for Hong Kong property market
- The end of more than a decade of cooling measures for Hong Kong’s property market is welcome and has sparked a surge in new home sales
- These changes must be put in proper context, though, as several other factors will be more consequential in setting the property sector’s course
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If there is a real estate market in Asia that deserved some good news, it is Hong Kong’s. On February 28, the city’s Financial Secretary Paul Chan Mo-po and Hong Kong Monetary Authority chief executive Eddie Yue Wai-man lifted the spirits of the residential sector by announcing that long-standing cooling measures would be scrapped and macroprudential regulations in the mortgage market would be eased.
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Having suffered a nearly 25 per cent decline in secondary prices since the September 2021 peak and a drop in sales last year to a 33-year low, the city’s housing market has been given a much-needed shot in the arm. Additional stamp duties for non-permanent residents, those purchasing a second property and those reselling their homes within two years were abolished with immediate effect.
Hong Kong’s de facto central bank also suspended the interest rate stress-testing requirement for mortgage loans and allowed buyers to borrow more to purchase more expensive properties.
The impact of the changes is already palpable. New home sales surged to 117 in the first five days following the policy shift, compared with an average of just 11 in the two months before the announcement, according to data from Midland Realty.
Morgan Stanley has turned bullish on the city’s housing market. In a report published just after the changes were introduced, it said the total addressable market of potential new buyers had increased sharply.
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In addition to mainland Chinese buyers and non-permanent residents, 408,000 citizens and permanent residents have assets greater than HK$10 million (US$1.3 million) and could buy a second home as an investment, while the 66 per cent of households that are mortgage-free could take out a mortgage.
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