Gov't rejects S&P’s claim of housing oversupply

It pointed out that housing demand is currently keen.

The government has dismissed S&P’s claim that the city has an oversupply of residential properties, stating that demand remains strong.

It pointed to a private housing vacancy rate of 4.5% at the end of 2024—consistent with the 20-year average—and rising rental prices.

The government expects the market to remain stable in 2025, supported by lower interest rates, economic growth, and an inflow of talent.

Property lending totaled $3.4t at the end of 2024, with residential mortgages making up 56% and commercial property loans 44%. Mortgage delinquency stood at 0.12% as of January 2025, whilst negative equity cases remained low at 0.15%.

The government said most borrowers can meet repayments, helped by strict lending rules that keep loan-to-value ratios at 60% and debt-servicing ratios at 40%.

Following the US Federal Reserve’s interest rate cuts, Hong Kong’s major banks have reduced their best lending rates by 0.625% over the past year, contributing to lower mortgage rates. Residential property prices have shown signs of stabilising in recent months, aligning with S&P’s own expectations for 2025.

On commercial real estate, the government agreed with S&P that banks can manage risks. It also defended smaller banks, saying they follow strict risk controls and have strong capital reserves to withstand market fluctuations.