Hong Kong real estate industry expected to regain its rally in three quarters

Bank International Although most investors are still worried about the continued deterioration of the future economy, the rise in unemployment and the softening of the property market, but with investor sentiment stable and developers to reduce sales prices to attract consumers, Hong Kong's primary market and the second-hand housing market turnover is gradually warmer,　　The volume of second-hand housing, in particular, has rebounded markedly from the last week of March. The main reason for the rapid pick-up in residential turnover, on the one hand, and most Hong Kong developers to reduce the price of 20%-25%, so that the relatively tight housing market and the current low interest rate of the environment, shorten the cash time, the strong demand for housing will be released; On the other hand, in the past few months　　The overall rent level in the Hong Kong residential market has fallen by more than 20%, the drop was roughly the same as the decline in property sales, so the current lease yield was about 4% to 5%, while the cost of bank mortgage interest rates was about 2% to 3%, providing investors with a relatively attractive 1.5% margin of revenue. In addition, as the property market improves, residential rents have also started to stabilise, and mortgage costs have started to fall since early March, mainly because more banks are starting to snatch up market share of home mortgages, and fixed-rate home loans are beginning to be accepted by a number of banks.　　Mortgage costs will be maintained at a relatively low level for a considerable period of time, and the gap between rental income and mortgage costs will gradually expand in the future, increasing the income of homebuyers, prompting a pick-up in turnover. On the basis of a rapid recovery in the profitability of real estate developers in Hong Kong, a stable investment property, a healthy balance sheet and a sufficient dividend allocation rate, we believe that the property market in Hong Kong will start to regain its rally in the three quarter of this year and there will be a potential increase of 10% to 15%. Moreover, the new round of the public rescue policy, which was announced by the Financial Secretary of Hong Kong at the end of May this year with a total value of HK $16.8 billion, will also directly stimulate the housing market to warm up. Therefore, we are optimistic about the future price performance of local developers in Hong Kong.