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This “first-tier city” housing prices are starting to pick up. What does it mean for the national property market?
Xiaobai reading finance Xiaobai teacher
Recently, there have been some changes in Hong Kong house prices:
The Hong Kong house price chart released by Midland Realty shows that the average price of the real estate in January this year was 12,307 Hong Kong dollars, down 1.6% from the previous month, and the chain of decline was narrowed. In February, the average price in real terms rose back to HK$12,482, up 1.4% from the previous month. According to Central Plains real estate data, the second-hand property market in Hong Kong has recovered significantly. In February, 2,290 second-hand transactions were recorded, totaling 17.78 billion Hong Kong dollars, up 4.7% and 11.9% respectively.
This means that after the winter of 2018, the Hong Kong property market finally ushered in a certain warmer.
Just four months ago, the Hong Kong property market also clearly felt the downward pressure. According to the Hong Kong Land Registry data, Hong Kong's residential sales in November 2018 were 2,635 units, a significant drop of 54% compared to the 5,694 units in the same period. In terms of price, the Central Plains City leading index data shows that Hong Kong's house prices fell by 3.43% in November last year, and have fallen for two consecutive months.
This decline is not enough. We must know that Hong Kong is known for its high housing prices. Its housing price trend has always been upward. Even in 2016 and 2017, when Hong Kong’s property market was most severely regulated, Hong Kong’s housing prices also rose. In the past two years, Hong Kong has raised 15% of the stamp duty on housing purchases twice. After the tax rate is raised, if a mainlander buys a house in Hong Kong, he must pay at least 30% of the stamp duty on buying a house.
However, this trend will not change until 2018. Although the Hong Kong government still follows the Fed’s interest rate hike as usual, its impact on the property market is relatively limited. Until September 27 of that year, HSBC announced that it would raise the prime rate, from 5% to 5.125%. For the first time in 12 years, its impact on the property market was immediate.
Because Hong Kong's interest rate hike only raises the interest rate of borrowing between the Hong Kong Monetary Authority and commercial banks, it has a limited impact on the cost of borrowing between commercial banks, enterprises and residents.
Hong Kong is a very open economy. For commercial banks such as HSBC, their sources of funding are not unique. When the cost of borrowing money from the HKMA increases, they can borrow money from their peers or borrow money from the market. . In particular, when the mainland-Hong Kong economic ties are getting closer, many funds have entered Hong Kong. For example, before 2018, Hong Kong stocks soared and many funds entered Hong Kong. Hong Kong's liquidity is abundant.
At the end of September 2018, HSBC announced that it would raise the prime rate. The impact of this rate hike on Hong Kong is the biggest, which will directly lead to an increase in the interest rate of commercial banks-enterprises and residents. Another point is that since 2018, the Hong Kong stock market has turned from rising to falling, and mainland funds have lowered their preference for Hong Kong. The Hong Kong market has also felt certain financial pressure. Eventually, mortgage interest rates rose and house prices began to fall.
However, as mentioned in the title of this article, the recent property market in Hong Kong has seen some warm recovery. What is the reason for this?
The key is that the market environment has changed. It is manifested in two points. First, from the time when the Fed officials spoke for a while, the United States will stop raising interest rates in 2019 and even cut interest rates next year. This will prevent Hong Kong from raising interest rates again. Second, since the beginning of this year, Hong Kong stocks have risen remarkably, and mainland funds have flowed in again, which is good for the Hong Kong market.
From the process of housing price changes in Hong Kong, we can get two inspirations:
1. Interest rate is the most important factor affecting housing prices. Although the regulation of Hong Kong's property market is very strict in 2016 and 2017, there is no express train to stop the rise in housing prices in Hong Kong. It will not be obvious until the interest rate rises in 2018. This shows the interest rate. The increase in the cost of buying a house brought about by the increase is more powerful than the administrative means.
2. There are similarities between the first-tier and second-tier property markets in the Mainland and the Hong Kong property market. For example, the short-term inflection points of Hong Kong housing prices in the past three years were in the Southeast Asian economic crisis in 1997, the international financial crisis in 1998 and the intensive interest rate surge in 2018. Similarly, these years are also the low point of mainland housing prices.
More importantly, the mainland's current round of real estate regulation and control began in 2016. During the period from 2016 to 2018, the regulation policy + mortgage interest rate rise finally caused the mainland housing prices to have downward pressure in 2018. The Hong Kong property market is also welcoming the combination of property market regulation + mortgage interest rate rise in 2016-2018. Today, the first warm-up in Hong Kong housing prices has certain implications for the mainland property market.
Now, mainland mortgage interest rates have begun to fall, and real estate-related taxes and fees have also shown signs of partial decline, which has great benefits in reducing the cost of buying a home. Under such a big back, the 2019 property market does not mean reversal. But the big probability will be much warmer than in 2018.
Editor in charge: Shen Xuejiao RF13056
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