Immigrating to Hong Kong News Update: According to media reports including the Securities Times, Shih Wing-ching, Chairman of Centaline Group, stated at a Lunar New Year media luncheon on February 17 that the Hong Kong property market has confirmed a 100% "trend reversal." He believes that property prices will continue to fall from their highs and suggests that the government needs to repeal the "spicy measures" (additional property taxes) to prevent the market from declining too rapidly. The repeal of these "spicy measures" would greatly facilitate immigrants in settling down and purchasing property in Hong Kong.
Hong Kong Property Market Cools; Land Prices Plummet
The Hong Kong property market has recently cooled rapidly, with significant declines in housing prices and sluggish land transactions. Data shows that in January 2016, there were 3,500 property transactions in Hong Kong, hitting a 25-year low. Research institutions such as UBS Securities and CLSA predict that Hong Kong housing prices will fall by about 10% this year, and by 2017, they will have fallen by 30%.
Shih Wing-ching also stated that he maintains his previous forecast of a 30% drop in property prices from their peak within two years. He believes that prices could fall by 15% by the end of this quarter, with small units experiencing larger declines as small property owners are more susceptible to economic impacts. He further noted that Hong Kong land prices have already seen a significant drop, falling 30% to 40% from their highs, reflecting a shift in developers' expectations for property prices. He added that the Hong Kong Monetary Authority's tightening of mortgage loan-to-value ratios, which forces owners to seek high-interest loans from finance companies, is not beneficial to property owners.
Government Needs to Repeal Property Market 'Spicy Measures'
Hong Kong's high housing prices are world-renowned. To regulate the market, the SAR government has repeatedly issued demand-side management measures, commonly known as "spicy measures." For example, starting October 27, 2012, the government imposed a "Special Stamp Duty" and "Buyer's Stamp Duty" to restrict non-permanent residents from purchasing residential properties. This policy stipulates that non-permanent residents and all companies must pay a double "Buyer's Stamp Duty" of 15%, increasing the cost of home ownership for non-permanent residents.
Shih Wing-ching believes that the government needs to repeal these "spicy measures" to prevent the property market from declining too quickly, as a sharp drop in prices would trigger a chain reaction and damage the overall economy. He stated that repealing these measures now would not cause prices to soar, noting that the current market is "catching a cold and does not need fever-reducing medication." In addition to repealing the "spicy measures," he suggested that the government should also relax mortgage policies, as Hong Kong banks currently have ample liquidity.
Repealing 'Spicy Measures' Will Facilitate Investment Immigrants in Settling Down and Purchasing Property in Hong Kong
Crisis breeds opportunity. For investment immigrants who have been unable to purchase property in Hong Kong due to the "spicy measures," the opportunity to settle down and buy a home in Hong Kong may be drawing closer step by step.