Hong Kong Property Market: Hong Kong's comprehensive "spice withdrawal" helps stabilize market confidence in the property market, expecting a resurgence in March.

On February 28, the Hong Kong budget for 2024/25 was unveiled. The Financial Secretary of Hong Kong announced the complete lifting of cooling measures in the property market. Effective immediately, all residential property demand management measures are revoked, meaning that all residential property transactions will no longer require the payment of additional stamp duties such as Special Stamp Duty (SSD), Buyer's Stamp Duty (BSD), and New Residential Stamp Duty (NRSD). The Hong Kong Monetary Authority also adjusted mortgage measures and suspended stress tests, essentially ushering in a new era of "no cooling measures" in the property market. Dave Ma, CEO of Hong Kong Property, believes that the comprehensive lifting of cooling measures will help stabilize market confidence in the property market, release more short-term supply, and facilitate faster property transactions. It is expected that the property market will see a resurgence in March, with an estimated 13,000 new property sales in 2024, an increase of about 24% compared to last year. The number of second-hand residential registrations is expected to increase by over 30% to 48,000, and both first and second-hand residential transactions are expected to exceed 60,000. The relaxation of mortgage restrictions and suspension of stress tests will reduce the burden on property buyers and, with interest rates expected to peak, further unleash market vitality. It is believed that the property turnover rate will increase from its low level to around 3.8%, and property transactions below HK$10 million will see a rise. To understand the latest property intentions of citizens after the budget announcement, Hong Kong Property conducted a survey in the form of a questionnaire on the "Property Intention after the Budget" after the budget announcement, receiving a total of 268 valid responses. The results show that more than 86.2% of respondents believe that they will benefit from the budget housing policies; over 81.7% of respondents said their confidence in property ownership has increased, with only about 15.3% of respondents stating that their confidence has not been affected, and around 3% feeling a decrease in confidence, highlighting the significant positive impact of the budget on public confidence in property ownership. The cooling measures that have suppressed the property market have been in place for over 13 years, and last year's property transaction volume hit record lows. The announcement of the budget lifting all cooling measures will immediately benefit more potential buyers, sellers, and investors, accelerating the turnover of the property market. Data from the land registry show that last year, there were 36,268 second-hand property transactions, a decrease of about 1.9% from 2022, hitting a new low since 1996. Calculated based on the turnover rate (the ratio of the number of registered transactions in a housing estate to the total number of units in that estate), last year's rate remained at a low level of about 2.9%, also reaching a new low since 1996. However, with the government's full withdrawal of cooling measures in the new budget, as well as adjustments to mortgage measures and suspension of stress tests, the property market sentiment is expected to improve. With the economy rebounding and interest rates declining, second-hand residential registrations are expected to increase by over 30% to 48,000 and the turnover rate is projected to rebound to about 3.8%. In addition, Ma pointed out that the comprehensive lifting of cooling measures will benefit second-hand transactions below HK$10 million. Data analysis by the research department of the bank showed that last year's second-hand property registrations decreased by about 1.9% year-on-year, with 31,345 registrations of second-hand properties below HK$10 million, indicating an increase of about 2.1% against 2022. As a result, the proportion of second-hand property registrations below HK$10 million increased by about 3.3 percentage points to about 86.4% last year. After the full lifting of cooling measures, it is believed that the number and proportion of second-hand property registrations below HK$10 million will further increase. Hong Kong Property pointed out that the favorable measures for the property market will boost transactions, and a property market spring is expected in March. Data from the bank's research department combined with information from the Residential Properties Sales Information website showed that 178 new property transactions were recorded in February (as of the 26th), with an estimated 200 for the entire month, reaching a record low in nearly two years. However, with the anticipation of the full lifting of cooling measures, many developers have accelerated the launch of new projects, and the government's response to market demands by fully lifting cooling measures and relaxing mortgage requirements is expected to stabilize market confidence, with new property transactions expected to increase about fourfold in March to about 1,000 units.