Financial Dismantling Bureau｜Re-launching 70% mortgage as a big move in the trust market?Fear that the property market will fall even faster｜Yan Baogang
Forecasted by Mr. Chan Mao-po two weeks ago, the Hong Kong Monetary Authority has finally relaxed the mortgage ratio for residential properties for the first time since it launched the counter-cyclical mortgage loan measures in 2009. Among them, the maximum mortgage ratio for self-use residential properties of 15 million yuan or less has been raised from 50% to 60%. To 70%, the 70% mortgage ceiling has been reproduced since 2015, but the mortgage ceiling for non-owner-occupied properties remains unchanged at 50%.
In September last year, the Hong Kong Monetary Authority adjusted the stress test requirements for property mortgage loan interest rates from an additional 3% to 2%. For the first time since the launch of the “spicy trick” in the past few years, the property market measures have been relaxed. Although the authorities have repeatedly denied that it is a measure to support the market, lowering the stress test threshold and targeting all buyers in the property market has the same effect. The actual effect is that the authorities have reversed the restrictions imposed on the property market before. In a disguised form, it is confirmed that the downward cycle of the property market has begun. “
After that, property prices in Hong Kong accelerated their decline in the fourth quarter, falling by 15% for the whole year, causing the number of negative assets to rise sharply to more than 12,000, an 18-year high, proving the downward cycle of the property market in disguise.
However, the decline in the property market was reversed in the first quarter of this year due to the sudden customs clearance factor: expecting mainland buyers to re-enter the market, many property market investors and users sneaked into the market, resulting in a “small spring” in the property market. The cumulative monthly increase was nearly 7%, almost recovering half of the decline in the property market last year. But soon everyone found that this factor of customs clearance did not drive mainland buyers to come to Hong Kong to buy properties. It reflected the BSD spicy tax of foreign buyers. In May, the property market fell by 20%. The increase has narrowed from a maximum increase of 7.11% this year to a latest increase of only 5.68%, which is a drop of nearly 1.5%.
In other words, “Xiaoyangchun” disappeared without a sound.
In all fairness, this time the 70% mortgage is re-introduced. On the one hand, buyers can buy properties below 15 million yuan with 30% of the first installment at no premium. Most of the transactions in the market are below 15 million yuan. Take the purchase of 15 million yuan properties as an example , after taking into account the mortgage insurance, the required down payment can be reduced by up to 44% to 3 million yuan, which is expected to help promote the “chain of property replacement” and normal market circulation, and support the property market.
However, when Hong Kong seems to be returning to normal and the economy is rebounding from the bottom today, the HKMA has re-introduced the 70% mortgage that has disappeared for eight years. Is it another confirmation that the rebound in the property market this year has come to an end? Is it even predicting that the property market will have a great opportunity to enter a downward cycle in the second half of the year? Regarding whether the relaxation means that the authorities believe that the property market will continue to decline, Yu Weiwen, the chief executive of the Hong Kong Monetary Authority, only said that property prices are only one of the considerations of the authorities, and at the same time, other factors are combined to make an overall judgment. In addition to interest rates and economic impacts, the authorities also have judgments on how to keep bank risks under control.
It is worth noting that it is the “instigator” this time, the Financial Secretary, Paul Chan Mo-po, who made a statement on his blog, saying that the “hot tricks” in the property market, including additional stamp duty, buyer’s stamp duty and new residential stamp duty, have not changed. He emphasized that there is no “prelude or variation” in this fine-tuning, and the government has no consideration of “reducing spiciness”. This statement of “no silver here” makes people even more guess that the next step will be to gradually reduce the heat.
As of the end of June this year, residential property prices have fallen by 13% from the peak in 2021. Some real estate analysts from major banks believe that the reduction is milder than expected. Residential properties priced above 12 million yuan accounted for only 12% to 13% of the overall transaction. It is estimated that the measures will not have much impact on the overall property market, and property prices are expected to maintain a downward trend.
Some analysts even said that the HKMA’s relaxation is only a “belated spring”. At present, interest rates are high and the economy is weak. Relaxing the mortgage ratio will not help reduce the burden of home buyers. Especially since about 80% of Hong Kong’s residential transactions are below 10 million yuan, 90% of which can already be mortgaged. The relaxation of the mortgage ratio this time will not have much effect on the transaction volume and property prices of most residential buildings.
In recent real estate news, there have been cases of price cuts and losses in the second-hand market. According to Centaline Real Estate’s statistics, in the first five months of this year, the book loss ratio was 10.2%, an increase of 2.1 percentage points from the second half of last year. The book loss ratio of residential units resold reached 65%, a sharp increase of 10.9 percentage points from the second half of last year. It is believed that some owners took advantage of the rebound in the property market and left the market at a loss.
At the same time, it is worth noting the Government’s stance on the reserve price for land sales. Recently, Wheelock bought the land on Xining Street in Kennedy Town at a price of 1.72 billion yuan and a floor price of about 7,071 yuan per square foot. In addition to the floor price per square foot being the lowest in Hong Kong Island in the past 21 years, it is also the current financial The first piece of government land sold this year. Some people in the industry believe that the land was sold at a low price without passing the bid, which reflects that under the current market conditions, the government’s first priority is to achieve the annual supply target and land sales revenue. It is believed that some land has lowered the reserve price in response to market conditions, and there will be more low prices in the future. Transactions will also become a negative factor in the property market.
In the second half of the year, the mortgage rate may further rise from the current 3.5% to 4% or higher. Some new families may choose to rent instead of buying a house. Buyers expect that property prices will become more flat the longer they purchase, which may lead to property prices falling by 5% or more in the second half of the year.
Note: The opinion of the columnist does not represent the position of this website
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2023-07-08 06:23:41
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