HONG KONG: Hong Kong’s property market immediately celebrated the removal of decade-long curbs with a jump in transactions, property agents said on Thursday, as authorities made a concerted bid to boost the city’s depressed real estate market.

Hong Kong, long among the world’s most expensive housing markets, saw prices plunge 20% from their 2021 peak, hurt by the pandemic, an exodus of residents triggered by Beijing’s imposition of the national security law and interest rate hikes.

On Wednesday, Hong Kong removed all additional stamp duties, reversing an unsuccessful government push over the past decade to cool housing prices.

The financial hub recorded 28 transactions in the new home market on Wednesday, compared to 14 the previous day and a daily average of four to five units last week, while the secondary market also saw a 50% increase from Tuesday.

Home sellers also turned bullish, with some raising their asking prices by 3-5%, according to property agents.

“We see the market is reacting positively,” Sammy Po, the residential CEO of Midland Realty 1200.HK, told Reuters.

“Buyer confidence has generally improved and they have speeded up their entry into the market.”

The latest relaxations could also attract more second homebuyers, foreigners and investors, property agents said, as they no longer need to pay up to 15% of additional stamp duties.

In a parallel move, the city’s de facto central bank on Wednesday raised the maximum amount homebuyers can borrow for most purchases to 70% from 50-60% previously, and for investors to 60% from 50%.

Shares of Midland 1200.HK surged as much as 44.6% on Wednesday, and many realtor branches put up new posters to celebrate the “historical” day. “Curbs became history; new era for the property market”, one read.

The website of Centaline Property Agency, another large realtor, was temporarily down after the government announcement due to a surge in traffic.

“It’s a 180-degree change. People who were not interested in the property market are now also interested,” said Louis Chan, Centaline Asia Pacific vice chairman, adding homeowners were also keen to check the valuation of their home.

Recent purchases would focus on small to mid-sized apartments, the agents expected.

Short term boost

Some young people, however, said they would wait and see given lacklustre career prospects, low wage growth and prices still beyond the reach of many potential first-time buyers.

Home prices in the city rocketed 200% in the decade to 2021, worsening one of the world’s most unaffordable markets and contributing to social dissent that broke out in mass anti-government protests in 2019.

Housing transaction volumes plunged 30% in the last two years as more residents turned to the rental market, and market participants said it is essential to see more sales for the prices to stabilize.

Midland expected volumes could surge up to 40% in March, while major developer Henderson Land 0012.HK forecast volumes could rise 30% for the full year.

Some agents cautioned conditions remain challenging.

“The negative factors such as high interest rates and a weak economy still exist and simply withdrawing the measures is not enough to reverse the downward trend,” said Joseph Tsang, Chairman of JLL in Hong Kong.

Interest rate cuts and an economic improvement would be needed for prices to bottom out and rebound, he added.

“There aren’t many job opportunities for young people in Hong Kong right now, and the job market is very limited,” said Kevin Chow, a 25-year-old PHD student.

“Coupled with the immense pressure young people face in affording property, many are relocating to the north in mainland China or overseas, so I don’t think the property market in Hong Kong will rise again.”