Letters | Hong Kong property market seems to be becoming subsistence-driven

Readers discuss the need for developers to adapt to the changing times, and how the government should respond to a property sector slowdown

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Potential buyers study the sales brochure of The Uppland, a development in Tuen Mun, at the sales office in Tsim Sha Tsui on July 20. Photo: Edmond So

Published: 11:30am, 2 Sep 2024

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A close look at the Hong Kong property market reveals similarities to the concept of subsistence economics, where consumers prioritise affordability and value over luxury. This trend is exemplified by the impressive sales performance of a new housing estate in Tuen Mun.

Early Light International Holdings, a property developer owned by tycoon Francis Choi Chee-ming, offered units at its project at Gold Coast Bay in Tuen Mun for a discounted price of between HK$8,903 to HK$11,900 per square foot. All the flats on offer during the initial launch were snapped up over a weekend in July.

In contrast, the property market in urban areas like Kai Tak has been comparatively sluggish. Potential homebuyers are now more selective and my impression is that they are inclined to prefer new units with prices ranging from HK$10,000 to HK$13,000 per square foot.

The broader implications of this trend seem to be that Hong Kong’s property market needs to evolve to cater to the changing needs and preferences of buyers. Developers who can offer competitively priced units in sought-after locations are likely to enjoy greater success, as homebuyers seek value and practicality in their investments.

Meanwhile, in a recent opinion column, Centaline Property Agency founder Shih Wing-ching called for the banking sector to adjust its lending policies, criticising banks for turning down mortgage applications because their quota had been exhausted. His arguments strike me as a self-serving attempt to protect the profits of property developers and agencies, at the expense of the wider community.

The prudent risk management approach taken by banks is exactly what is needed to safeguard Hong Kong’s financial security. With property prices already having fallen over 25 per cent since 2021, relaxing lending standards would only serve to inflate another bubble, putting homeowners and the broader economy at risk. The government should continue to empower the Hong Kong Monetary Authority to exercise its prudential regulatory role. It is the authority’s duty to ensure loans are only extended to creditworthy borrowers.