Hong Kong Property Stocks Soar as Cooling Measures are Scrapped
Hong Kong property developers experienced a surge in stock prices after the city’s Financial Secretary, Paul Chan, announced the removal of property cooling measures. This move aims to boost the real estate sector, which has been grappling with high borrowing costs and weak economic sentiment. The Hang Seng Property index initially rose 2.4% in response to the announcement. However, it later slipped from session highs, while the broader Hang Seng index fell 1.47%.
Positive Market Reaction
Several prominent property developers saw a significant increase in their stock prices. New World Development shares surged over 8% before settling at 4%. Hysan Development added 0.3%, Sun Hung Kai Properties rose 1.35%, CK Asset increased by 0.55%, and Henderson Land Development traded 3.83% higher.
Background of Hong Kong Housing Market
Hong Kong’s housing prices, once the most expensive in the world, have witnessed a decline of almost 20% since reaching their peak in 2021. This decline can be attributed to rising interest rates and a more cautious market sentiment.
Goverment Initiatives
To stimulate the market, Hong Kong has announced the withdrawal of buy-side tightening measures for residential properties. In addition, stamp duties payable on the transfer of Real Estate Investment Trust (REIT) units will be waived immediately.
Impact on Transaction Volumes and Property Prices
Peter Churchouse, Managing Director of Portwood Capital, a leading real estate investment company, expects a swift increase in transaction volumes with the reduction in stamp duty. He further predicts a potential pickup in property prices towards the end of the year.
Wider Market Implications
The scrap of cooling measures is expected to have a positive impact on the wider Hong Kong stock market. The residential property market and stock market in Hong Kong have shown a high correlation. The stocks have recently fallen around 40% from their previous highs. The removal of cooling measures provides hope for a brighter future for the stock market.
Future Policy Changes
Paul Chan hinted at the possibility of further policy changes regarding property lending. The Monetary Authority of Hong Kong is expected to make announcements regarding these changes later.
Economic Outlook
Paul Chan expressed optimism for Hong Kong’s economy, projecting a growth rate of 2.5% to 3.5% this year. The government is also allocating over HKD 1 billion ($127 million) to support the tourism industry.
In conclusion, the removal of cooling measures by the Hong Kong government is seen as a positive step for the property market. With the potential for increased transaction volumes and a revival of property prices, developers and investors are hopeful for a brighter future. The impact of these changes extends beyond the real estate sector, with expectations of a positive shift in the wider Hong Kong stock market. The upcoming announcements by the Monetary Authority regarding property lending policies will further shape the market’s trajectory.