The stocks of Hong Kong developers saw an increase after Financial Secretary Paul Chan decided to eliminate property cooling measures in a move to strengthen the sector. This decision comes as the industry has been facing challenges due to high borrowing costs and weak economic sentiment. The Hang Seng Property index surged 2.4% after the announcement, although it later receded from its peak. Meanwhile, the broader Hang Seng index experienced a decline of 1.47%.
Specifically, New World Development witnessed a spike of over 8% before settling at 4%, while Hysan Development saw a 0.3% increase. Sun Hung Kai Properties and CK Asset also recorded gains of 1.35% and 0.55% respectively. Additionally, Henderson Land Development registered a notable growth of 3.83%.
Hong Kong’s housing prices, which were once among the highest in the world, have dropped nearly 20% since reaching their peak in 2021. This decline is attributed to the rise in interest rates and a decrease in market confidence. Sales and purchase agreements for all building units in 2023 declined by 2.7% compared to the previous year, with sales volumes nearly 40% lower than in 2021. The government’s home price index also continued to fall for the ninth consecutive month in January, dropping by 1.57%.
Peter Churchouse, managing director of Portwood Capital, a prominent real estate investment firm, expressed optimism about the impact of reducing stamp duty on transactions and property prices. He anticipates a swift increase in transaction volumes and suggests a potential rise in property prices towards the end of the year. Churchouse noted that the adjustments in stamp duty could have a positive ripple effect on the broader Hong Kong stock market, given its close correlation with the residential property sector.
Despite a significant decline of around 40% in Hong Kong’s stock markets from their previous highs, Churchouse believes that there is hope for a revival in the market. The recent changes in property regulations and the expectation of eased lending policies signal a possible turnaround. Hong Kong’s Monetary Authority is poised to make forthcoming announcements regarding property lending policies. Moreover, Chan is optimistic about the economy’s growth potential, projecting a range of 2.5% to 3.5% for the year. The government is also allocating over 1 billion Hong Kong dollars ($127 million) to bolster the tourism industry.
This article delves into the recent developments in the Hong Kong property market, highlighting the impact of policy changes on the sector’s performance. Despite the challenges faced by the industry, there are positive signs of recovery and growth on the horizon. The evolving landscape of the property market in Hong Kong presents both opportunities and challenges for investors and stakeholders.
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