Hong Kong’s eased mortgage rules for unfinished homes will have little impact on property market, as buyers fret over interest rates and economy, analysts say

First-time homebuyers will not rush to purchase unfinished flats in Hong Kong despite relaxed mortgage rules, as they remain reluctant to make significant investments when interest rates are high and the economy is weak, analysts have said.

Sammy Po Siu, chief executive of Midland Realty’s residential division for Hong Kong, on Saturday questioned the effectiveness of the measures, aimed at stimulating the property market.

“The relaxation measures have not significantly impacted buyers’ purchasing desires,” he said, pointing to worries over interest rates, stock market weakness and limited economic growth.

Under the changes that came into effect on Friday, eligible first-time homebuyers need only make a 10 per cent down payment for properties under construction and valued up to HK$10 million (US$1.3 million), according to a subsidiary of the government-backed Hong Kong Mortgage Corporation. The remaining payment can be covered by a loan.

Previously, buyers acquiring unfinished flats valued above HK$6 million were not eligible for such mortgages.

The adjustment, aimed at aligning the policy with rules for completed residential properties, is intended to boost buyer sentiment in the first-hand property market, where developers have been under pressure to cut prices to accelerate sales. CK Asset Holdings, a leading developer owned by tycoon Li Ka-shing, last month priced its Coast Line II apartments project in Yau Tong at a seven-year low.

For unfinished homes valued between HK$10 million and HK$15 million, owners can borrow up to 80 per cent of the amount, while for flats worth between HK$15 million and HK$30 million they are entitled to 70 per cent mortgage financing.