The Hong Kong government is planning to consider a marginal relaxation on a mortgage loan-to-value for some residential property purchases, the city’s finance chief mentioned.
Finance Secretary Paul Chan Ma-Po said on the Commercial Radio Program that the government is operating with the Hong Kong Monetary Authority and will be carefully focusing on balancing financial stability and the interests of first-time homebuyers.
The state raised the cap for first-time buyers on purchasing properties. For instance, a 10% down payment of HK $10 million was raised, which was previously HK $8 million. But it hits hard for some homeowners who are requesting the government to assist them in purchasing properties as they have started families, Chan added.
Chan conveyed to buyers and residents that the interest rate will get higher as the US Federal Reserve will hike rates once or twice in the second half of this year. We know that it is not meeting market expectations but we are moving in lockstep as Hong Kong currency is pegged to the US dollar.
At the beginning of the month, Chan discussed with lawmakers about slackening the loan-to-value ratio for first-time homebuyers. But to ease property cooling measures including adjusting stamp duties, this proposal has been rejected.
The sad part is Hong Kong’s residential market is weakening after a quick rebound in the first quarter. CitiGroup said last month that home prices were left unchanged from the start of 2023. They are observing a 7% drop in the property market. As far as second-hand property is concerned, it smacked 13% from its record in 2021.
Due to these high fluctuations in property rates, property developers are a bit afraid and a lot of shifts are taking place. On Friday, the first round of sales initiated at a new residential development in Ap Lei Chau, which was abruptly called off just before it was set to kick off. Hong Kong developers are in the fray to sell flats at lower prices amidst weak demand and high inventory levels ahead of an upcoming interest rate hike.
According to original sales information, the Aruna project developed by Chuang’s China Investments had planned to offer 25 units ranging from 205 sq. ft to 317 sq. ft, priced between HK $5.31 million and HK $8.58 million after discounts or HK $25,945 to HK $27 for 498 per sq. ft.
In February, the government shrunk the value stamp duty on home sales to HK $100 for homes worth up to HK $3 million, instead of the previous HK $2 million, to assist first-time buyers getting on the home-buying ladder.
- Published By Team Hongkong Journalist