"On the first weekend of "Spice Out", the Hong Kong property market boomed!"

The housing market in Hong Kong has been completely "spiced up" (canceling buyer's stamp duty, new residential stamp duty, and additional stamp duty), setting off a thousand waves and causing a dramatic shake-up in the Hong Kong property market, with a surge in activity on the first weekend after the policy announcement. According to media reports, Henderson Land's latest residential project sold out within hours after the first round of sales started. According to data from Midland Realty, during the first two days of the "spice cancellation" (February 28-29), the number of new home transactions in Hong Kong reached 80 units. This data accounted for nearly 30% of overall new home transactions in February. In terms of foot traffic in offline stores, the top ten housing estates recorded 510 group appointments to view properties over the weekend, reaching a new high in 11 months, with a 34.2% weekly increase. Previously, Hong Kong Financial Secretary Paul Chan Mo-po announced in his budget speech that all residential property transactions no longer required payment of additional stamp duty, buyer's stamp duty, and new residential stamp duty. In addition, the Hong Kong Monetary Authority has relaxed some mortgage loan rules. With property prices in Hong Kong already at a seven-year low at the time these policies were introduced, now that the "spice cancellation" is fully implemented, can Mainland Chinese buyers also benefit, and can property prices in Hong Kong stabilize? Industry insiders: Hong Kong property prices are expected to gradually narrow their decline in the near future. According to the latest data from the Rating and Valuation Department of Hong Kong, the private residential property price index for January 2024 was 306.4 points, a monthly decline of 1.57 points, marking nine consecutive months of decline and a cumulative decline of 13.5%, the longest decline in the property market in over 20 years. Some industry insiders believe that the main reason for the continuous decline in Hong Kong property prices is the market's widespread expectation of "spice cancellation," leading to a strong wait-and-see sentiment and a continuous decline in transaction volume. In addition, transaction volumes involving "spice tactics" also hit a new low, which may have been one of the triggers for the full "spice cancellation." According to data from the Inland Revenue Department of Hong Kong, the total number of transactions involving the three major "spice taxes" last year was approximately 2,811, the lowest since the record of the three residential "spice taxes" in 2014, and the revenue from "spice taxes" in 2022 and 2023 was less than HK$6 billion in two consecutive years. The Securities Daily reported that Yang Chang, chief analyst of the Zhongtai Research Institute Policy Team, stated that the cancellation of stamp duties and other measures in Hong Kong at this stage may indicate a policy intention to reduce purchasing costs and activate the property market to some extent. Yang Mingyi, senior joint director of research at Midland Realty, stated that the impact of the complete "spice cancellation" and the relaxation of mortgage loan rules on the prices of local second-hand properties will only begin to be reflected in the CCL to be announced in late March. She expects that second-hand transactions will gradually increase, and the property market can smoothly enter a seasonally strong market, with a gradual narrowing of price declines. 02 Lowering the cost of home purchase for Mainland Chinese buyers, doubling inquiries. After the policy announcement, the daily page views on Midland's website surged by 50%, with the number of users increasing by over 30%. The next day (February 29), the query and valuation volume on Midland's website also saw a more than 40% increase. The reason for this is that including Mainland Chinese buyers, non-local buyers in Hong Kong will also benefit from this "spice cancellation" as they no longer need to pay any additional "spice taxes." Before this, Mainland Chinese buyers could only be exempt from buyer's stamp duty and new residential stamp duty totaling 15% after obtaining "high talent" or "special talent" status. In comparison, local buyers in Hong Kong only need to pay a maximum of 4.25% ad valorem stamp duty. According to Colliers International's prediction, it is expected that in the four months following the "spice cancellation," the number of transactions for new homes in Hong Kong may increase by 1.4 times to 6,000 compared to the previous four months, while the number of second-hand transactions may increase by 50% to 14,000 during the same period, resulting in a total increase of 70% in the number of first and second-hand property transactions, reaching a level of 20,000. 03 What will be the long-term effects of the complete "spice cancellation"? The complete "spice cancellation" may have far-reaching effects on the Hong Kong property market. If the policy can effectively boost the property market, it may have a positive impact on the overall economy. However, if the property market remains sluggish, the government may need to further adjust its policies. Huang Lichong, CEO of Hui Sheng International Capital, stated that the above policies may stimulate some purchasing power in the market in the short term, especially in the residential property market below 10 million Hong Kong dollars. For the high-end luxury housing market, this measure may have limited impact, and it is expected that the overall property market will still face adjustments this year, with price declines possibly being kept under 5%. Some analysts also believe that as the Hong Kong economy is deeply linked to the US dollar and has free flow of foreign exchange, whether the property market can stabilize and whether the future actions of the Federal Reserve will have a direct impact.