HK's property market on way of recovery: BOC report

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Last updated at: (Beijing Time) Friday, October 03, 2003

HK's property market on way of recovery: BOC report

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The signing of the Closer Economic Partnership Arrangement (CEPA) between Chinese mainland and Hong Kong leads to a much higher expectation in, and is favorable for a healthy recovery of, the property market, said a report released by the Bank of China (Hong Kong) Ltd. on Thursday.

The research report on the current situation of the property market said that after the signing of CEPA, the market starts to look favorably at Hong Kong's future economic development. Allowing mainland residents to visit Hong Kong on individual basis stimulates the retail sector, brightens the market atmosphere, and also strengthens investors' home-buying confidence.

The growth of mainland visitors will bring businesses to the retail and financial service sectors, and help improving employment and deflation. From the property market's point of view, the most positive effect of CEPA is that the arrangement will greatly facilitate the flows of people, goods, and capitals between mainland and Hong Kong, said the report.

It is expected that the high-income class from the mainland, especially from the Pearl River Delta, will be more interested in Hong Kong properties after they gradually become familiar with Hong Kong's legal and business environment. And Hong Kong will regain its status as the most attractive place for property investment in the Asia-Pacific region, the report said.

In the past several years, Hong Kong's property price and interest rates decreased dramatically, while the median household income was maintained at a relatively stable level. The home-buying afford ability by Hong Kong residents with stable jobs has reached its highest level in the history, said the report.

The current rental yields of small and medium-sized residentialunits are the highest in almost 10 years. As for large units, it is around the historical average. The rental returns for all types of residential units are much higher than deposit rates. With the expectation of property price to stop falling and poise to rise, the demand for long-term investment will reappear, said the report.

The Hong Kong Special Administrative Region government revised its overall housing policy last November, and came up with nine measures to stabilize the property market. Those measures are beginning to work toward balancing the medium to long-term demand and supply.

The market is currently waiting for the new measures that the government will release to further stabilize the property market. No matter what the specifics will be, the housing policies will continue to assist the market recovery in the future, the report said.

The report predicted that since there is still abundant supply in the market, the property price seems lack of enough momentous to soar in the near future. It is more likely to see small to modest gains, helping to maintain a healthy recovery.

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