Hong Kong’s move to make it easier for first-time home buyers to break into the world’s least-affordable housing market has had an immediate effect, with sales surging in the past two weeks.
Sales in the secondary market have more than doubled since mortgage rules for first-time buyers were eased mid-October, Midland Realty Ltd said.
Primary home sales are also doing well, with all 167 units at China Evergrande Group’s Emerald Bay project selling, Hong Kong Economic Journal reported.
The policy doubled to HK$8 million ($1 million) the amount a first-home buyer with a 10% down-payment could borrow, as the government tries to quell protests fueled in part by the city’s rising inequality.
“There is obviously a lot more interest from buyers now than before the new rule,” said Ivan Wong, an assistant district manager at Midland Realty. He said he began to receive more calls from clients the day after the policy change.
Meanwhile, sellers are acting as quickly as house-hunters. Asking prices have increased by 4%-5%, Wong said.
“The sellers are now standing firm on their pricing. It’s harder to bargain.”
While property prices have been declining since often-violent protests erupted in June, the easing of mortgage rules has slowed the decline. Used-home prices slipped 0.14% in the week ended on October 20, the smallest drop in two months, data from Centaline shows.