Hong Kong homeowners speed up sales as surprise rate cut stirs mixed sentiments on rebound prospects
- At least five home transactions were recorded after the HKMA lowered its base lending rate in response to the Fed’s emergency rate cut
- Rate cut stirs mixed sentiments as buyers fear policy support for sector will weaken their bargaining power
Flat owners and property agents in Hong Kong are taking advantage of the surprise interest-rate cut this week to speed up sales in a market hobbling through the coronavirus outbreak.
At least five home transactions were recorded at discounts ranging from 2.7 per cent to 6.25 per cent immediately after the Hong Kong Monetary Authority lowered its base lending rate on Wednesday in lockstep with the US Federal Reserve’s first emergency rate cut since the 2008 global financial crisis.
A buyer decided to complete the purchase of a 729 sq ft flat at Bamboo Mansions in Whampoa for HK$12 million (US$1.54 million) after getting 6.25 per cent off the asking price, according to Centaline Property Agency. In Tin Shui Wai, a 650 sq ft flat at Tin Chung Court was sold for HK$4.08 million or a 5.1 per cent discount from the listing price, according to Midland Realty.
“When buyers see the interest rate environment is lower, they tend to be more willing to enter the market, before homeowners raise their asking price,” said Timothy Yuen, a senior branch manager at Centaline. “The rate cut will actually make homeowners more confident.”
The HKMA reduced its key rate to 1.5 per cent from 2 per cent, mirroring the Fed’s 50-basis point cut as global policymakers took pre-emptive measures to counter the threat of coronavirus, adding to the 75 basis points cut in total last year as the city’s economy slipped into a technical recession.
