An urban view of high-rise buildings at dusk as seen from Victoria Peak in Hong Kong.
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Hong Kong developer shares rose after Finance Minister Paul Chan scrapped property cooling measures in a bid to boost the sector, which has been hurt by rising borrowing costs and weak economic sentiment.
In his budget speech on Wednesday, Chan announced that Hong Kong will withdraw all buy-side tightening measures for residential properties and waive stamp duty on the transfer of REIT units with immediate effect.
The Hang Seng Real Estate Index jumped 2.4% after the announcement, but has since fallen from its session highs, while the broader Hang Seng Index fell 1.47%. Development of the New World Shares jumped more than 8% before currently trading at 4%. Hessian development He added 0.3%. Characteristics of Sun Hong Kai And CK Origins It rose 1.35% and 0.55%, respectively Henderson Land Development It traded up 3.83%.
Hong Kong's housing prices, once the most expensive in the world, have fallen nearly 20% since their peak in 2021 on the back of rising interest rates and waning market sentiment.
Purchase and sale agreements for all building units in 2023 fell by 2.7% from last year, according to the city's real estate registry. Sales were also nearly 40% lower than in 2021. The government's home price index also fell for the ninth straight month in January, down 1.57%.
“With these reductions in stamp duty, I think we will certainly see a fairly rapid recovery and transaction volumes,” said Peter Churchhouse, managing director of Portwood Capital, a leading property investment firm. “Then at the end of the year, we may start to see a slight rebound in property prices.”
Until recently, the city imposed a 7.5% stamp duty on non-permanent residents purchasing properties on top of additional properties purchased by permanent residents. Rates for both fees were reduced from 15% in October.
Churchhouse added that this could be “a bit of a positive shift” for the Hong Kong stock market more broadly because it is closely linked to the residential property market. Hong Kong stock markets have fallen about 40% from their highs two years ago.
“We may see a little light at the end of the stock market tunnel,” he said.
Chan also noted that there is more room to ease policies related to mortgage lending. The Hong Kong Monetary Authority is scheduled to make announcements later today.
Chan added that he expects the economy to grow in the range of 2.5% to 3.5% this year.
The Hong Kong government is also providing more than HK$1 billion ($127 million) to support the tourism industry.
