Hong Kong's property market was liberalized, and some mainland customers bought 20 sets in one go
"Hong Kong's 'withdrawal of spicy' is neat, it has stepped in and grabbed funds and home buyers with mainland cities. ”
Text / Ba Jiuling
"I have been 'eating soil' for a long time before 'withdrawing spicy', and I have slept 5 hours a day for the past two weeks. When asked about the changes in Hong Kong's property market, the real estate agent Liang Tsai smiled and took out his mobile phone and shook it in front of us.
On February 28, the Hong Kong government of China made a big blow to save the market, and on the same day, the financial secretary of the Hong Kong government announced that it would completely cancel the "spicy move" of the property market that had been implemented for 14 years.
Source: Photographed by minibus
The so-called "spicy measures" specifically refer to the restrictive measures adopted by the Hong Kong government in order to deal with the overheating and excessive speculation of the property market, which can be understood as the sum of the measures of "macroeconomic regulation and control of the property market" by analogy to the mainland.
Different from the mainland's measures such as "purchase restrictions" and "price restrictions", the Hong Kong government uses stamp duty as the "anchor" to regulate the property market, which is specifically divided into "three spicy":
▶ ▷ First, non-Hong Kong permanent residents buying houses or buying houses in the name of a company are subject to 7.5% buyer's stamp duty.
▶ ▷ Second, non-Hong Kong permanent residents buying houses or buying houses in the name of companies are required to pay 7.5% stamp duty on new homes.
▶ ▷ Third, if you sell within two years after buying a house, regardless of whether you are a Hong Kong resident or not, you have to pay 10%-20% special stamp duty.
Now, Hong Kong has abolished all three stamp duties, which is the so-called "comprehensive removal".
All of a sudden, the news of the soaring transaction volume of the Hong Kong property market and the "crowding" of the sales office was very loud.
In fact, this is not the first time that the Hong Kong government has relaxed the regulation of the property market, as early as October 23, 2023, when Hong Kong Chief Executive John Lee delivered his second policy address in office, he announced that the property market would be "spicy", but the market response at that time was average, and this time it brought a new frenzy to the Hong Kong property market beyond expectations.
In order to find out, three weeks after the official announcement of the "withdrawal of spicy" by the Hong Kong Financial Secretary, we flew to Hong Kong to conduct field research.
The volume of inquiries in three weeks is the sum of the previous six months
Before visiting the property, Centaline Real Estate's agent Liang Tsai introduced us to several sets of data:
Before the "withdrawal", the average number of new houses traded in a single day in Hong Kong was about 20, and after the "withdrawal", the average number of new houses was more than 100, that is, the transaction volume of first-hand houses rebounded by about 5 times, and the transaction volume of second-hand houses increased by about 3 times.
At the same time, Hong Kong only launches more than 10,000 new projects per year on average, and about 2,100 units were sold in the first two weeks after the "spicy withdrawal", that is, one-fifth of the annual supply was wiped out in two weeks. In the two months before the "withdrawal", the total number of new housing transactions was only about 700 units.
Liang Tsai also revealed to us that after the "comprehensive withdrawal", the number of consultations he received in the past three weeks was about the sum of the past three months or even half a year.
On 15 March, we visited the sales offices of Henderson Land's Belgravia Place project in Cheung Sha Wan and UptownEast in the heart of Kowloon.
On March 4, the first round of sales of Belgravia Place in Cheung Sha Wan was launched, with 138 units sold out within six hours. On March 7, the real estate opened for the second time, launching 208 suites, and the number of intention registrations reached 7,300, which was oversubscribed by 34 times. 190 units were sold on the same day, accounting for more than 90%. According to the intermediary, the developer urgently launched 92 suites that night.
But when we arrived, we didn't see the crowds on the news not long ago, as most of the new launches had already been sold within a week.
Photographed by Centaline Real Estate Agency
The next day, we chose Leo Place, which had just opened for ticket entry (newly opened), but we still didn't see the expected crowds of queues. The intermediary told us that it might be because of the diversion.
On the same day, the Lohas Park project in Tseung Kwan O and developed by Wheelock Properties also opened at the same time, receiving nearly 6,000 subscriptions in three days of sale.
Even if there is no crowding, you can intuitively see that no matter which real estate, there are many people who come in and out accompanied by intermediaries, and there is an endless stream.
There are also many agents squatting at the entrance of the sales office, handing out leaflets or talking to potential customers.
Source: Photographed by minibus
At the Leo Place sales office, we pretended to be a graduate student in Hong Kong who was interested in buying a new house. As soon as the words fell, an intermediary immediately rushed over to enthusiastically accompany him to visit the model house.
Walk through the staggered model rooms and come to the negotiation area. There are more than 20 small round tables, each of which seats between two and six people, while other buyers study the layout of the house around the project model. According to rough estimates, there were 60 or 70 people in the negotiation area, and the scene maintained an orderly order in the midst of the hustle and bustle.
A flock of mainlanders
According to Centaline Real Estate's data, within three days of the "withdrawal", the number of inquiries made by mainland buyers on Centaline Property's website doubled.
During the visit to the model house, from time to time, Mandarin-speaking mainland buyers passed by us, and from the conversation, we could hear that some mainland buyers were ready to buy a house for rent, and some mainland couples visited the model house under the guidance of an agent.
Source: Photographed by minibus
According to the data provided by Cheuk Sir, a staff member of Henderson Land, the ratio of intending home buyers in Hong Kong and the mainland is roughly 1:1.
Liang Zai said that if conservatively estimated, among the buyers who actually closed the deal, Chinese mainland customers accounted for about 2 and a half to 3 percent.
The most direct reason for the influx of mainland tourists is that after the "comprehensive withdrawal of spicy", the policy of mainlanders buying houses in Hong Kong is completely in line with that of Hong Kong people. For example, if a mainland buyer wants to buy a HK$10 million house in Hong Kong, they used to have to pay a "spicy tax" of 15%, or HK$1.5 million, but now, like Hong Kong residents, they only need to pay HK$370,000 ad valorem stamp duty, which is an overnight saving of HK$1.13 million.
Stimulated by the new policy, after the "withdrawal", the transaction volume of primary and second-hand houses in Hong Kong has risen sharply.
Source: Courtesy of the interviewee
The agent revealed that the most exaggerated thing is that he has seen a mainlander buy more than 20 full-floor suites and prepare them for rent.
Sister Li, an agent of Hung Yuen Real Estate, works close to the University of Hong Kong, and her clients are mainly Hong Kong students and white-collar workers in Sheung Wan. She said that since the "withdrawal of spicy", the number of inquiries from mainland customers, especially mainland students in Hong Kong, has increased significantly.
However, she said bluntly that this does not mean that her business may become better in the future, because in the past, other intermediaries were more focused on local property buyers in Hong Kong, but in recent years, with the launch of schemes such as the "Top Talent Pass Scheme" launched by the Hong Kong government, which aims to attract highly educated and high-income talents to Hong Kong, more mainland talents have entered, and other intermediaries have increasingly recognized the importance of mainland customers, so they have begun to "grab business".
For her, the "comprehensive withdrawal of spicy" means the intensification of competition within the industry, and for other intermediary companies, it means "forced transformation". In addition, developers may also give more consideration to the preferences of mainland home buyers when developing new developments.
Can buying a house buy up the house price?
According to our observation, whether it is in Cantonese or Mandarin, the logic of some buyers rushing for real estate more or less implies the purpose of investment, and the end point of investment is naturally to be optimistic about the price increase of Hong Kong's property market.
In fact, one of the main purposes of the Hong Kong government's "comprehensive withdrawal" is to boost the property market. Since the epidemic in 2020, Hong Kong's property market has gradually become sluggish, with property prices plummeting by nearly 16% in 2022 and another 7% in 2023, directly falling back to the level of 7 years ago, and the transaction volume has shrunk by 5%.
Hong Kong Residence
Corresponding to the downturn in the property market, Hong Kong's land market has also been weak in recent years, with land premium revenue in 2023/24 only HK$19.4 billion, far less than the expected income of HK$85 billion, and the most important revenue pillar of the Hong Kong government has almost failed. Therefore, its "withdrawal of spiciness" also has the consideration of encouraging real estate developers to dare to take land and enrich their pockets.
In the above context, several intermediaries said that they had expectations for the "withdrawal of spicy", but they did not expect it to be in place in one step, so quickly and thoroughly.
However, despite the surge in transaction volumes, we have noticed that developers are offering low offers for new homes compared to the past. For example, a one-bedroom, 24-square-meter house is priced at about HK$4.5 million to HK$5 million, while the price of a similar unit in the Leo Place No. 1 corner launched in the last phase is basically above HK$6 million.
According to our consultation, there are two reasons for the low price of new homes:
On the one hand, developers are eager to withdraw funds, and on the other hand, developers are not confident enough in the market recovery, so they slow down the pace of price increases.
As a result, at present, there is an almost inverted scene in Hong Kong's first-hand and second-hand housing prices - the price of new houses is low, and some second-hand housing landlords are temporarily "backwatering" and raising the price.
Judging from the on-site visits, the short-term effect of "removing spicy" is powerful. So what are its medium- and long-term effects?
When we randomly asked buyers "how long do you think the hot property market will last after the 'withdrawal'", most of them said they were not sure.
There are two more representative views, one is more optimistic, that the hot scene will continue, and the housing market may be even hotter if the Fed cuts interest rates in the future. Moreover, the rental rate in Hong Kong is high, which can reach more than 3%, even if the house bought is not used for self-occupation, it is feasible to "use the house to maintain the loan" in the future.
Another view is that the current heat is just a concentrated release of pent-up demand. Hong Kong mainly attracts mainland talents engaged in the financial industry, although there are talent introduction programs such as "Talent Pass", but the real financial jobs that can be provided are still limited, so Hong Kong's housing prices in the future lack of support for further increases.
One respondent gave an interesting answer, saying that no matter what the medium- and long-term effects of the "spicy withdrawal" are, Hong Kong's "spicy withdrawal" is simply and neatly, which is better than the twisting and pinching of the property market. Because this sends a signal that the Hong Kong government has the will and courage to stabilize the housing market.
*Note: All names in this article have been changed
本篇作者 |毕冉| 责任编辑 |何梦飞
主编 |何梦飞| 图源 |VCG