2024-05-17 28Hse Editor
David Cheung Wang-ip Chartered surveyor, Chinese property appraiser
Following this year's budget proposal to adjust the ad valorem stamp duty for residential and non-residential properties, the SAR government made another move in early July to fine-tune the loan-to-value (LTV) ratio for mortgaged properties. Looking back on the market situation this year, the Financial Secretary pointed out that overall property prices have fallen by about 12 per cent from the historical peak in 2021. Meanwhile, the monthly residential transaction volume in the first half of this year has also returned to about 90 per cent of the average value of the five years pre-pandemic. Based on the above-mentioned objective market conditions, the SAR government believes that there is room to revise mortgage rules. The adjustments are aimed at reducing the initial expenditure and insurance costs of first-time buyers and those hoping to trade up, and emphasize that it is not a removal of cooling measures. The public response to the fine-tuning of mortgage arrangements is mostly welcome, but some still believe that a comprehensive reduction of cooling measures is the most effective measure to boost Hong Kong’s sluggish property market.
Not just home prices fell. Over the past two years, the prices of government-tendered residential and commercial land and "One Railway, One Bureau" land respectively have dropped by more than 20%, and many commercial and remote residential land have lost bids. From the low-priced land prices, many have observed an economic downturn in the market. Alongside low home prices to start with, land prices fall even deeper. Although the market’s downturn is the main reason for low land prices, many remaining factors also affect land price. In February, a commercial plot in Kwun Tong worth HK$10 billion was withdrawn, and in March, the commercial land in Sai Yee Street in Mong Kok was sold for only HK$4.7 billion.
The Sai Yee Street commercial site offers many social welfare facilities
The commercial site on Sai Yee Street in Mong Kok is close to Mong Kok East Station. It covers an area of 124,000 square feet and has a total floor area of 1.5 million square feet. The transaction price is HK$4.729 billion, and the floor price per square foot is about HK$3,100, which is lower than the market valuation.
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