Hong Kong sees best weekend for home sales since April on heels of new policy

[HONG KONG] Hong Kong Chief Executive Carrie Lam's plan to relax mortgage rules for first-time buyers appears to have already spurred sentiment, with the city recording its best weekend for home sales since April.

The 10 biggest housing estates tracked by Centaline Property Agency recorded 20 sales over the weekend, more than three times the weekend before. That's despite violent protests that have rocked the former British colony now since June.

Separately, Sing Tao reported that China Evergrande Group's Emerald Bay project in Tuen Mun received 1,100 applications, more than double the number of apartments available.

The government's decision to allow first-time buyers to purchase more expensive homes with a downpayment of just 10 per cent has boosted transactions, said Louis Chan, the CEO of Centaline's residential division. "Buyers who have been adopting a wait-and-see attitude are worried that if they don't buy now, homes will get pricier. So they speed up their purchases," he said.

Secondary home transaction volumes have dropped since demonstrations against the now-withdrawn extradition bill began, while prices have slipped about 5 per cent, data from Centaline show.

"The government's decision to relax the loan-to-value ratio may help first-time buyers and upgraders who were previously only able to buy new flats because developers could offer financial benefits," Joseph Tsang, chairman of Jones Lang LaSalle for Hong Kong, said. "With this change, buyers will shift to the secondary market, which offers plenty of potential stock and lower property prices."

BLOOMBERG