Hong Kong’s declining home costs dragged extra mortgage debtors into unfavorable fairness, placing them underneath better monetary pressure as property costs present little prospect of rising amid a torpid housing market and excessive rates of interest.
The mixture worth of negative-equity loans rose to HK$165.3 billion (US$21.1 billion), in contrast with HK$131.3 billion on the finish of December.
“As property prices have fallen by more than 20 per cent from their peak, most homeowners who entered the market with a high loan-to-value ratio from 2019 to 2022 have a greater chance of falling into negative equity, resulting in an increase in the number of negative-equity cases,” mentioned Eric Tso Tak-ming, chief vice-president of mReferral.
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How Hong Kong’s housing market turned among the many world’s most unaffordable
How Hong Kong’s housing market turned among the many world’s most unaffordable
He added that though property costs rose barely in March, there’s a backlog of recent home provides and builders proceed to promote new properties at low costs, which has stored second-hand property costs underneath stress, making banks cautious of their valuations.
With property costs unlikely to rebound considerably within the brief time period, the variety of unfavorable fairness instances is prone to fall solely within the second half of the yr, Tso mentioned.
Hong Kong homebuyers snap up all flats at Great Eagle’s Onmantin project
Hong Kong homebuyers snap up all flats at Great Eagle’s Onmantin project
Borrowing prices stay excessive as the town’s de facto central financial institution follows the US Federal Reserve’s financial coverage due to the foreign money peg. That prospect might stretch into September, after Fed chairman Jerome Powell struck a hawkish tone just lately on US inflation, saying that it may take “longer than expected” to get inflation again on the right track.
The improve within the variety of residential mortgage loans in unfavorable fairness within the first quarter was primarily on account of an additional decline of two.8 per cent within the first two months of 2024 after residential property costs fell by 5.4 per cent within the fourth quarter of 2023, a spokesman for the HKMA mentioned.
Even although residential property costs rebounded by greater than 1 per cent in March, the latest unfavorable fairness quantity has not but totally mirrored the change in property costs in March, he added.
The HKMA additionally mentioned the asset high quality of the banking sector’s residential mortgage loans stays wholesome, noting that the general delinquency ratio on the finish of March was solely 0.09 per cent, and the delinquency ratio for unfavorable fairness instances stood at solely 0.06 per cent
This reveals that the overwhelming majority of mortgage mortgage debtors have been in a position to make their repayments on time, and that the dangers associated to the banks’ mortgage business is underneath management, the spokesman mentioned.
Meanwhile, Sun Hung Kai Properties has priced 188 models on the Yoho Hub II residential mission above Yuen Long MTR station about 30 per cent decrease than the primary section.
The common value per sq. foot after reductions is HK$14,338, in contrast with HK$19,899 for the primary batch of 206 models launched in December 2021.
The saleable space ranges from 467 sq ft for 71 two-bedroom models to 905 sq ft for 117 three-bedroom models. The costs vary from HK$6.82 million to HK$12.99 million.
