The new cycle of interest rate cuts spurred by the Fed failed to lift Hong Kong’s secondary property market over the weekend
The new cycle of interest rate cuts spurred by the US Federal Reserve failed to lift Hong Kong’s secondary property market over the weekend, as cautious buyers from the mainland stayed on the sidelines.
Only seven deals got done over the weekend, a decline of 53.3 per cent from a week earlier, marking a new eight-week low. South Horizons in Aberdeen saw three transactions, Metro City in Po Lam had one, there was one in Whampoa Garden and one in Caribbean Coast in Tung Chung.
Lower rates haven’t had the desired effect, and the city has not experienced a rebound like it did after property cooling measures were withdrawn in late February. This is mainly due to the slow response from mainland buyers and investors, who are still holding a wait-and-see attitude and have not yet entered the market. The market is now mainly supported by local buyers, and therefore has not seen an immediate improvement.
Hong Kong’s largest commercial banks lowered their prime lending rates last week. These decisions came after the Hong Kong Monetary Authority cut its base rate to 5.25 per cent from 5.75 per cent, in lockstep with the Federal Reserve.
HSBC lowered its prime rate by a quarter-point to 5.625 per cent, while Bank of China (Hong Kong) said it would reduce its benchmark to the same level. Standard Chartered and Bank of East Asia will pare their prime rates to 5.875 per cent. Local lenders raised their lending rates by a total of 87.5 basis points during the cycle that just ended.
The lower rate environment is generally positive for the local economy and property market. However, the effect is not expected to be as pronounced as the complete removal of cooling measures at the end of February this year, which attracted some investors back into the market.
Developers are likely to rush to launch new projects in response to the favourable rate cut news. With increased competition, pricing for new projects will be more conservative and may even start lower to attract buyers. Therefore, pressure on the property market persists, and we continue to expect property prices to decline this year.
Comments