In view of increased lending cost and stamp duty taxes, Hong Kong based buyers may wait to invest in the residential market, according to JLL’s Hong Kong Residential Sales Market Report.
Reportedly, US Fed has decided to increase interest rate which has pushed the one-month Hong Kong Inter-bank Offered Rate (HIBOR) up by 45 bps within a month resulting high borrowing cost. Based on this, home buyers may have to pay extra HKD 1,000 on mortgage monthly payment for every HKD 1 million borrowed with the twenty-year loan tenure.
Adding to above hit, the government has come up with 15 per cent stamp duty tax on most of the residential transactions to dampen the heated buying activity. As Hong Kong has grown its trust on PRC-backed funds, local property market remains susceptible to the regulatory environment in the mainland.
At this critical time for buyers and residential market, everyone has an eye on Chief Executive election, scheduled in March, which is going to direct any policy changes. Hong Kong buyers would wait until then. This causes Hong Kong developers to face a build-up in property inventory.
“While residential sales volumes are like to soften, potential silver linings in the market include capital inflows from mainland China despite restrictions on onshore funds, the strong holding power of homeowners and gradual improvements in the economy, lending support to capital values of mass and luxury residential remain broadly stable and rise by up to 5% in 2017,” says Henry Mok, Regional Director, Capital Markets, JLL.
Source: World Property Journal