Hong Kong Property Stocks Surge as Cooling Measures Scrapped Amid Economic Revival Efforts

Government’s Move to Lift Restrictions Boosts Developer Confidence and Market Sentiment

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Hong Kong property developers witnessed a surge in stock prices following Financial Secretary Paul Chan’s decision to eliminate property cooling measures in a bid to stimulate the sector, which has been grappling with high borrowing costs and subdued economic sentiment.

In his budget speech, Chan announced the withdrawal of all buy-side tightening measures for residential properties and the immediate waiver of stamp duties on the transfer of REIT units. The Hang Seng Property index rallied 2.4% in response to the news, although it moderated from session highs, while the broader Hang Seng index experienced a 1.47% decline.

Shares of key developers soared, with New World Development climbing over 8% initially before settling at a 4% increase, and Hysan Development adding 0.3%. Sun Hung Kai Properties and CK Asset rose 1.35% and 0.55% respectively, while Henderson Land Development saw a substantial 3.83% gain.

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The move comes amid a significant downturn in Hong Kong’s housing market, with prices plummeting nearly 20% since their peak in 2021. Transaction volumes have also declined, prompting the government to take decisive action to stimulate activity.

Peter Churchouse, managing director of Portwood Capital, expressed optimism about the impact of the stamp duty reductions, predicting a swift increase in transaction volumes and a potential uptick in property prices by the year’s end. He noted the positive implications for the broader stock market, which has faced significant declines in recent years.

Chan also hinted at further policy easing in property lending, with the Monetary Authority expected to make announcements later. He forecasted economic growth in the range of 2.5% to 3.5% for the year ahead and allocated over 1 billion Hong Kong dollars ($127 million) to support the tourism industry as part of broader efforts to bolster economic recovery.

The scrapping of cooling measures signals a proactive approach by the government to revitalize the property market and stimulate economic activity, with hopes of reigniting investor confidence and driving growth across key sectors.