Hong Kong may relax mortgage loan-to-value ratios amid sluggish property market: Financial Secretary Paul Chan
Hong Kong’s government is considering marginally relaxing mortgage loan-to-value ratios for some residential property purchases, the city’s finance chief said.
The government is working with the Hong Kong Monetary Authority and will carefully deliberate to balance financial stability and the interests of first-time homebuyers, Financial Secretary Paul Chan Ma-po said on a Commercial Radio programme.
The city last year raised a cap for first-time buyers to acquire a property with a 10 per cent down payment to HK$10 million (US$1.3 million) from HK$8 million. Some homeowners called for the government to assist with purchasing bigger flats after they start families, Chan said.
Chan also cautioned residents against a high-interest rate environment amid market expectations that the US Federal Reserve will hike rates once or twice in the second half of this year. Hong Kong interest rates move in lockstep with the US as the local currency is pegged to the US dollar.
Earlier this month, Chan told lawmakers he would consider further relaxing the loan-to-value ratio for first-time homebuyers but rejected proposals to ease property cooling measures, including adjusting stamp duties.
Hong Kong’s residential market is showing fresh signs of weakness after a short-lived rebound in the first quarter. Home prices may end the year unchanged from the start of 2023, suggesting a 7 per cent drop, Citigroup said last month. A gauge of second-hand property prices is down 13 per cent from its record in 2021.
On Friday, the first round of sales at a new residential development in Ap Lei Chau was abruptly called off just hours before it was set to kick off, as Hong Kong developers are racing to sell flats at lower prices amid weak demand and high inventory ahead of anticipated interest rate hikes.
The Aruna project, developed by Chuang’s China Investments, had planned to offer 25 units ranging from 205 sq ft to 317 sq ft, priced between HK$5.31 million and HK$8.58 million after discounts, or HK$25,945 to HK$27,498 per square foot, according to the original sales information.
In February, the government reduced the ad valorem stamp duty on home sales to HK$100 for homes worth up to HK$3 million, instead of HK$2 million previously, to help first-time buyers get on the home-buying ladder.
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