HSBC finally adjusted the cap rate of the Hong Kong Interbank Offered Rate (HIBOR) mortgage rate from P-2.5% to P-2.25%. Subsequently, Standard Chartered also followed HSBC’s approach. This news is very bad for the Hong Kong property market.
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In the past, the property market was not only used for living, but also a financial product. When the interest rate is low, it is a suitable choice to buy a property, but when the interest rate rises and the interest lock period is reached, the bank will adjust the charges, and the interest rate will not be locked without a period, so the cost of borrowing money will increase. Not good for the property market.
Property market volatility expected to expand
The current interest rate is capped at 2.75%, and it even reaches 3.3% with floating interest rates. Normally buying a property to collect rent is regarding a 2.5% return, so a downward adjustment in the property market is very likely to happen. However, because the government can remove the hot tricks, such as the cancellation of the double stamp duty for mainland buyers, this action may happen when the property market drops by 10% to 15%, so that the market can stabilize, so the Hong Kong property market can be expected to fluctuate will zoom in.
At present, there is still no policy in the mainland, indicating when the real estate will be relaxed. It is rumored that foreign media will guarantee certain private real estate companies. This is a good way to restore confidence in the market without spending too much money. It is equivalent to nationalizing the real estate market in disguise, which will restore confidence to everyone.
However, in a nationalized real estate market, in addition to housing, the investment function of finance has been greatly reduced, and it is difficult to have huge appreciation potential and room for wealth creation as it has in the past 20 years. In the new era, it is necessary to accept new thinking, and the adjustment of the property market may be painful, but in the long run, if more people can afford it, society will continue to develop and wealth will not be overly concentrated.
Lu Zhiwei
This column is published every Friday
