Housing policy cushions Hong Kong's property slump, adding US$3 billion to wealth of city's six richest real estate tycoons

By
Lam Ka-sing
,
Sandy Li and Lilian Cheng kasing.lam@scmp.com
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October 21, 2019 9:32 AM SGT
The Hong Kong government's relaxation of mortgage payment rules for the first time in nine years would help spur sales of lived-in homes by as much as 30 per cent in the quarter ending in December, putting a cushion under the slump in the city's real estate sales.
In her televised policy address on Wednesday, the city's Chief Executive Carrie Lam Cheng Yuet-ngor unexpectedly raised the mortgage cap to 90 per cent, from 60 per cent, for home worth as much as HK$8 million (US$1 million), enabling first-time buyers to secure more loans for their purchases.
"Hong Kong government's effort at boosting home ownership by introducing several new initiatives are likely to unleash pent-up demand and drive an earlier-than-expected home price recovery," said Citibank's property analyst Ken Yeung, who estimated that third-quarter sales had declined by 5 per cent.
The unexpected incentive came at a fortuitous time for Sun Hung Kai Properties (SHKP) and CK Asset Holdings, which offered a combined 453 apartments for sale a day after Lam's address, the first time since 2015 for the city's two largest property developers to compete head to head.
CK Asset, the flagship company of Hong Kong's wealthiest man Li Ka-shing, sold 110 flats out of 218 units on offer at the Seaside Sonata project in Sham Shui Po. SHKP, controlled by the Kwok family, sold 93 flats out of 235 units at the Cullinan West III complex, in the same neighbourhood.
Together the sales were the worst since early February, when only two of 101 flats on offer were sold on Friday at Reach Summit, a Yuen Long project developed by Henderson Land Development and New World Development. Still, the policy bolstered Hong Kong's listed property developers, adding an estimated US$3 billion to the combined wealth of the city's six wealthiest property tycoons including Li and the Kwok family, according to Bloomberg.
The increase in mortgage allowance was a much-needed help to Hong Kong's home market, whose bull run had stumbled in the past few months as a combination of the 15-month-long US-China trade war and the city's worst...