By South China Morning Post | Created at 2024-10-17 10:40:13 | Updated at 2024-10-17 13:24:29
2 hours ago
The Hong Kong government believes its new rules for more liberal mortgage financing create a “positive expectation” of recovery in the moribund real estate market. A HK$845 million (US$109 million) mansion sale in Deep Water Bay on Wednesday may support that view, but analysts said a thorough market rebound may take years to materialise.
The changes, which Chief Executive John Lee Ka-chiu unveiled in his policy address on Wednesday, allow buyers of both residential and non-residential properties to finance a greater amount of the purchase price than they could previously.
The government is confident that the change projects “a more positive expectation” about the healthy and stable development of the market, Financial Secretary Paul Chan Mo-po said at a briefing on Thursday.
The move aims to overcome inertia that has held the market down this year. Residential property prices declined by 6.2 per cent in the first eight months and have dropped 26.6 per cent from their peak in 2021, according to the Hong Kong Monetary Authority (HKMA). During the same period, prices for offices, factories and retail premises slumped by 17.5 per cent, 11.8 per cent and 13 per cent, respectively.
Under the new rules homebuyers will be able to finance as much as 70 per cent of a home’s purchase price effective immediately, regardless of the value or intended use of the property. In addition, the debt-servicing ratio has been raised to 50 per cent from 40 per cent, standardising the level for residential and non-residential properties, it added.
Homes valued at more than HK$30 million will be entitled to the 70 per cent financing, compared with 50 per cent to 60 per cent previously, the HKMA said.
