Midland Realty: Hong Kong property market recovery momentum remains solid, maintains full-year home price growth forecast of 15%

MIDLAND HOLDING (01200) Chief Executive Officer and Executive Director of Midland Realty, Ma Tai-yeung, said that neither Hong Kong's first "Five-Year Plan" nor the new "Policy Address" released yesterday focused extensively on private residential measures, reflecting the Hong Kong government's view that the property market has entered a healthy recovery track and its choice to adopt a less interventionist strategy to let the market adjust on its own. Ma Tai-yeung believes that the current recovery momentum in Hong Kong's property market is solid, and short-term fluctuations in interest rates are not expected to have a major impact on medium- to long-term home prices. Coupled with a improving Hong Kong economy, ample liquidity, rising rents, population growth, and declining inventory, all of which are favorable to the property market, he maintains his forecast of a 15% increase in home prices for the full year. However, the market still needs to closely monitor the U.S. Federal Reserve's stance on interest rate trends going forward, especially the magnitude and pace of future rate hikes. Ma Tai-yeung pointed out that the Fed announced a 0.25% rate hike, the first increase since July 2023. Because Hong Kong interest rates have not fully moved in sync with U.S. adjustments over the past few years, exhibiting a pattern of "raising slowly and cutting quickly," Hong Kong banks did not immediately follow with a rate hike this time, as the market had expected. However, the U.S. may still raise rates again before the end of this year, at which point Hong Kong interest rates may rise accordingly. In addition to interest rate factors, housing policy is also key to property market trends. He continued that interest rates are only one of many factors affecting the property market. Hong Kong interest rate trends have been broadly stable this year, with the mReferral Mortgage Brokerage Services Rate Index (MMI) fluctuating within a narrow range of 3.12% to 3.27% over the past eight months. Even though the market had long anticipated a U.S. rate hike, Hong Kong's property market has gradually emerged from its consolidation phase, and residential transactions have rebounded. Based on data from the first-hand residential property sales information website and market sources, first-hand transaction volume in the first 16 days of September exceeded 790 units, more than doubling the 379 units in the same period in August and accounting for over 70% of August's full-month total of nearly 1,100 units. With multiple new projects preparing for launch, first-hand transaction volume this month is expected to reach about 1,500 units, a four-month high. Ma Tai-yeung added that the performance of super-luxury homes has been particularly outstanding, clearly showing that the wealthy have cast a vote of confidence in Hong Kong's property market. In the first 16 days of September alone, 22 first-hand transactions worth over HK$100 million were recorded, more than 46% higher than the 15 transactions in the whole of August and already setting an eight-month high. Year to date (as of September 16), first-hand transactions worth over HK$100 million have totaled 129, not only surpassing last year's full-year total of 101 but also setting a new high since the implementation of the Residential Properties (First-hand Sales) Ordinance in 2013. Amid geopolitical uncertainty, Hong Kong, as an international financial center, continues to have an active financial market. Coupled with the expansion of high-value-added financial institutions driving wealth effects and home-buying demand from high-income talent, this will continue to support the luxury property market.