The new policies, unveiled by the Hong Kong Monetary Authority (HKMA) on June 14th, specifically target buyers who purchased presale properties one to two years ago and now find themselves in a situation where the appraised value of the property is below the transaction price. Such buyers may face difficulties securing mortgage loans as banks typically base loan amounts on appraised property values. The updated policy relaxes these conditions, enabling prospective homeowners to access higher percentages of mortgage financing to navigate current market challenges.
Reports highlight recent activities and policy changes in Hong Kong's real estate market, exemplified by the photographic documentation of new property listings in the West Kowloon Development Area. These developments underscore the government's efforts to bolster the property market recovery.
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Periodic property transactions have been integral to Hong Kong's real estate market for decades, evolving alongside regulatory refinements. Buyers can opt for various payment methods such as progressive payments during construction or installment payments upon completion, each carrying its own set of advantages and risks. Construction period payments, for instance, do not require immediate mortgage repayments before completion but expose buyers to price fluctuation risks. Conversely, installment payments upon completion have historically been favored for substantial discounts, although their attractiveness has waned with increased price volatility. Banks conduct "stress tests" to assess buyers' repayment capacities, a critical factor in purchasing decisions.
The HKMA's new policies are timely in the current market environment, particularly beneficial for buyers opting for construction period payment plans. These measures include simplified affordability calculations and adjustments to rental income deductions, aimed at reducing the risks of widespread defaults resulting from declining property values.
However, it is essential to note that policy measures alone may not completely reverse market dynamics. The stability and healthy growth of the real estate sector still hinge on overall economic stability and growth. Therefore, prospective homebuyers should prudently assess risks and make informed decisions. While these short-term support measures provide temporary relief to the market, sustained stability and healthy development of the property market will require more comprehensive measures and economic policies over the long term.
