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Hong Kong buyers rush to snap up homes after curbs removed

RAY Yuen had been patiently waiting for months for a buyer to show interest in his Hong Kong home, hoping to upgrade to a larger property for his family. Unfortunately, offers were scarce, and the ones that did come in were unreasonably low.

However, everything changed rapidly. Following Financial Secretary Paul Chan’s announcement of the removal of all additional property levies, Yuen’s 340 square foot apartment saw a surge in viewings. By March 2, he successfully sold it at a modest discount that he found acceptable. The very next day, he signed a contract to purchase another property.

Yuen’s experience mirrors the remarkable rebound in Hong Kong’s residential market. Buyers who had been holding back due to high borrowing costs rushed in, anticipating a price rebound after the recent policy change.

In the first five days after the removal of cooling measures, Hong Kong’s new-home sales skyrocketed tenfold compared to two months ago, as reported by Midland Realty. Henderson Land Development’s Belgravia Place project in Kowloon witnessed a frenzy, selling almost 200 apartments within hours after applications were oversubscribed by 34 times.

The city’s secondary home market is also experiencing a recovery, with the number of transactions in the ten largest estates reaching a 61-week high last weekend, according to Midland Realty.

The removal of the 15 per cent levy for foreign buyers and the 7.5 per cent levy for existing-home owners has attracted a surge in demand. Everyone is now subject to the regular rate, capped at 4.25 per cent.

The urgency among buyers is fueled by past experiences, with memories of Hong Kong’s property market trends. For instance, in 2009, Yuen sold a home but didn’t make another purchase, missing out on a decade-long bull run driven by ultra-low interest rates.

The removal of additional taxes has also attracted interest from non-residents, particularly mainland Chinese investors who see Hong Kong as an attractive destination for property investment, given the relatively lower tax rates compared to other overseas cities.

Despite the optimism among buyers, analysts are less convinced that home values will rebound soon. High interest rates and an abundant near-term supply may pose challenges to the recovery of Hong Kong’s home prices.

While the market remains uncertain, some buyers view the current scenario as an opportune time to enter the market, capitalizing on the considerable decline in home prices from their peak.

The Straits Times

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