Date
20 October 2017
Approximately 90 percent of all transactions in the residential property market in recent months involved first-time buyers. Photo: Reuters
Approximately 90 percent of all transactions in the residential property market in recent months involved first-time buyers. Photo: Reuters

New HKMA curbs on lending unlikely to cool housing market: JLL

The Hong Kong property market will remain robust despite recent efforts by the Monetary Authority to rein in lending in the sector, real estate consultancy Jones Lang LaSalle said.

“The market will still remain supported by strong pent-up demand, largely from first-time buyers,” JLL said in its latest residential sales market report released on Thursday.

Over the past two weeks, the de facto central bank rolled out measures to control lending to developers and property mortgage loans in an attempt to cool the overheating market.

The HKMA asked financial institutions to be more prudent in assessing credit risk, while lowering the loan-to-value (LTV) ratio and applicable debt service ratio (DSR) limit for prospective borrowers.

The twin restrictions will mean greater difficulty in obtaining mortgage financing, which in turn will prompt buyers to continue to prefer properties in the primary market, where financing options and other incentives are being offered, JLL said.

On the other hand, the ability of developers to provide secondary mortgages will be constrained as the HKMA strengthens credit risk management of financial institutions and lowers the LTV for site acquisition and construction financing to property developers.

However, the new measures “are unlikely to have any material effect on the market dynamics”, JLL said.

Citing the latest data on double stamp duties, Ingrid Cheh, senior manager of research department at JLL, said approximately 90 percent of all transactions in recent months involved first-time buyers. 

Henry Mok, JLL regional director of capital markets, said the restrictions on developers, such as higher credit risk assessment barriers, may spur more joint ventures between small and medium-sized mainland builders and local heavyweights. 

“Overall, the two-way squeeze should only see the market turning more prudent but no less sought after,” JLL said.

In April, the JLL Hong Kong Mass Residential Index, a measure of the price trend in the market, rose 17.8 percent from the same period last year and 2.5 percent from the previous month.

There were 7,060 transactions worth HK$69.6 billion. Of these deals, 2,650 or HK$38.3 billion involved new residential units.

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Henry Mok, regional director of capital markets at JLL, said new restrictions on developers may spur more joint ventures between small and medium-sized mainland builders and local heavyweights. Photo: JLL


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