Since the comprehensive relaxation of stamp duties in the Hong Kong property market last month, the market has remained hot, with one new housing project setting a record for the highest single-day sales. Due to the significant reduction in the threshold for property purchases in Hong Kong, mainland buyers account for about thirty percent.
After the comprehensive relaxation of stamp duties in the Hong Kong property market, developers have accelerated their new project launches, with multiple new developments selling well. For example, the "Blue Coast" project developed by Cheung Kong Group and MTR Corporation had unprecedented sales upon its first launch. Publicly available information shows that over 13,000 registrations were recorded on the 5th day, with subscriptions exceeding 70 times the available units, resulting in sales of nearly HK$7.5 billion, breaking the record for the highest single-day sales in Hong Kong. The project is located in the convenient transportation hub of Wong Chuk Hang, adjacent to several popular new developments and high-quality schools, attracting significant buyer interest. It is reported that the next phase of sales for this project is planned to be at a higher price.
According to data from Midland Realty, the number of new property transactions in Hong Kong increased by about 14.5 times to around 4,200 units in March, reaching a new monthly high since 1998. The number of transactions for second-hand residential properties was approximately 5,000 units, representing an increase of nearly 85% compared to the previous month.
Belief Real Estate reminds mainlanders planning to buy property in Hong Kong not to blindly follow the trend. On the one hand, property prices in Hong Kong are still among the highest in the world. On the other hand, there are still some obstacles for mainlanders to buy property in Hong Kong, such as issues related to fund remittance and mortgage loans.
For most mainland buyers, the first "hurdle" to buying property in Hong Kong is the remittance of funds. Under the current foreign exchange control policies, the annual limit for individuals' fund remittance is only USD 50,000, and there are strict restrictions on the use of funds. Faced with down payments of millions of dollars, how to transfer funds to Hong Kong is a challenge.
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Why are mainland buyers rushing to buy property in Hong Kong? After the relaxation of stamp duties, the Hong Kong property market has become more attractive compared to first-tier cities in mainland China. There are three main advantages: reduced purchase costs, property prices at cyclical lows, and relatively high rental yields.
Before the relaxation of stamp duties last October, mainlanders buying property in Hong Kong had to pay a stamp duty of 30%. After the relaxation, the "first exemption and subsequent payment" policy only benefits those with Hong Kong residency, while ordinary mainlanders still face a 15% stamp duty. With the relaxation of stamp duties, the tax cost has been significantly reduced. For example, for a property worth HK$10 million, the tax payment can be reduced by approximately HK$3 million.
The Hong Kong property market has been cooling since 2022, with some areas experiencing a decline of over 30%. In January of this year, property prices hit their lowest point in more than seven years, with transaction volume reaching record lows. However, in terms of the price-to-income ratio, Hong Kong's property price-to-income ratio was 37.57 in 2023, ranking first but not much different from Beijing and Shanghai.
The rental yield in first-tier and core second-tier cities in mainland China is about 1.5%, while the rental yield in Hong Kong is around 3% (it was as high as 6% in the past), and in recent years, despite the decline in property prices, the rental yield in Hong Kong has been increasing. Therefore, the rental yield in Hong Kong is indeed attractive.
Of course, the holding costs of residential properties in Hong Kong should also be considered, including property management fees, property tax, government rates, and land rent. After deducting these costs, the rental yield in Hong Kong is still higher than that in first-tier cities in mainland China.
In addition to these short-term factors, buyers are also voting with their feet in favor of Hong Kong. As an international financial, shipping, and trade hub, as well as a global offshore RMB business hub and international asset management center, Hong Kong occupies a unique position in China. For ordinary people, Hong Kong's free trade, low tax rates, absence of foreign exchange controls, and high degree of marketization, as well as abundant job opportunities, are all attractive.
Hong Kong's education, scientific research, and medical care are also at the international forefront, especially in terms of children's education, which has significant advantages. Not only are there more choices, but the difficulty of enrollment is also much lower than that in mainland China. In addition, holding a Hong Kong passport allows visa-free access to 171 countries and regions.
