Investor Concerns as Interest Rate Changes Fail to Stimulate Hong Kong Property Market
Market Reactions to Interest Rates
The recent interest rate cuts by banks have not sparked the anticipated investor interest in the Hong Kong property market. According to Professor Chau Kwong-wing, director of the Ronald Coase Centre for Property Rights Research, the current cuts are inadequate to revitalize home prices and attract investor participation. A significant portion of investors remain skeptical as the US Federal Reserve continues to influence local rates.
Adjustments by HKMA
On September 19, the Hong Kong Monetary Authority (HKMA) initiated a policy easing cycle, reflecting the US Federal Reserve's recent half-percentage point cut. Despite commercial banks trimming rates for the first time in five years, experts like Eddie Lam Yat-ming express doubts about market recovery.
Investor Perspectives
- Interest Rate Impact: Although the mortgage rates have been lowered, many investors find the differences marginal.
- For instance, on a HK$5 million loan at prime minus 1.75%, the payment reduction is only HK$720 monthly.
Notably, the one-month Hong Kong interbank offered rate (Hibor) has recently fluctuated, remaining a concern for investor appetite in property investments.
Current Market Conditions
- Lived-in home prices have seen consistent monthly declines, with a 1.72% drop reported.
- The residential rental sector is witnessing a surge, with rents increasing and making rental yield more attractive for some cash-rich investors.
As market dynamics continue to evolve, investors are urged to exercise considerable caution and await more favorable conditions before engaging in new property purchases.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.