First time homebuyers rush to lock in home purchases before prices rise further

They snapped up to 90% of home sales in the first four months of 2018.

Hong Kong’s residential market was flooded by first-time homebuyer purchases, according to real estate consultant JLL, with such transactions averaging 4,728 per month in the year to date to April.

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First time homebuyers accounted for up to 90% of home sales in the first four months of the year which represents a stronger showing than than the monthly average of 4,458 and 3,232 recorded in 2017 and 2016 respectively as residents rush to lock in home purchases before prices could rise any further in the world’s least affordable housing market.

“The biggest challenge for home upgraders are the outright costs associated with buying a flat, including the 15% stamp duty as well as tightened mortgage conditions,” said JLL regional director of capital markets Henry Mok.

For buying a two-bedroom flat costing over $10m, a buyer would require a down payment of at least $5m which is further aggravated by stamp duty payments and other costs which could easily cost another $1m, he added.

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Hong Kongers still face major hurdles in getting a seat on the city’s property ladder even with the extension of the stamp duty rebate window from six to twelve months. Latest government figures show that the monthly average of home transactions involving 15% stamp duty, as a proxy for upgrading cases, clocked in at 663 between February and April 2018 which was largely similar to the monthly average of 659 cases recorded between December 2016 and January 2018 when the stamp duty extension was not yet implemented.

“The outright costs and payment schedule, considered as major to the buyers, remain unchanged, despite extension of the stamp duty rebate window extension,” Mok added.