Hong Kong's Property Market Revitalized: Key Takeaways from John Lee's 2024 Policy Address

Inclusion of Residential Property in Investment Portfolios

One of the most noteworthy announcements was the inclusion of residential property investments in the New Capital Investment Entrant Scheme (New CIES). This marks a significant shift in Hong Kong's investment immigration policy, opening up new avenues for high-net-worth individuals looking to gain residency in the city.

Key points of the new policy include:

1. Minimum investment threshold: Residential properties with a transaction price of no less than HK$50 million are now eligible.

2. Investment cap: The amount of real estate investment that can be counted towards the total capital investment is capped at HK$10 million.

3. Effective date: This change is effective immediately from October 16, 2024.

4. Private company investments: Starting March 1, 2025, investments made through an eligible private company wholly owned by an applicant will be counted towards the applicant's eligible investment 

Easing of Mortgage Loan Restrictions

The Hong Kong Monetary Authority (HKMA) announced significant relaxations of mortgage loan restrictions, aiming to stimulate the property market and make homeownership more accessible. These changes, which took effect immediately, include:

1. Standardized Loan-to-Value (LTV) ratio: The maximum LTV ratio for all residential properties is now set at 70%, regardless of property value or whether it's for self-occupation.

2. Increased LTV for net worth-based assessments: For mortgage loans assessed based on the applicant's net worth, the maximum LTV ratio has been increased from 60% to 70%, matching the ratio for loans assessed on debt servicing ability.

3. Relaxed Debt Servicing Ratio (DSR) limits: The DSR limit for non-self-use properties has been adjusted from 40% to 50%, aligning it with the limit for self-use properties.

4. Removal of multiple mortgage penalties: The requirement to lower the applicable maximum LTV ratio and DSR limit by 10 percentage points for applicants with other outstanding mortgages has been lifted.

Impact on the Hong Kong Property Market

The combined effect of these policy changes is expected to have a significant impact on Hong Kong's property market:

1. Increased demand for luxury properties: The inclusion of residential properties in the New CIES is likely to boost demand for high-end real estate, particularly in sought-after areas like the Peak, Mid-Levels and the Southside.

2. Easier access to homeownership: The relaxation of mortgage restrictions will make it easier for first-time buyers and upgraders to enter the market or move up the property ladder.

3. Renewed interest from foreign investors: The new policies are expected to attract more international investors and new immigrants to Hong Kong's property market, potentially leading to increased capital inflows.

Whether you're a first-time buyer, looking to upgrade, or an international investor considering residency, our consultants are ready to help you navigate these new changes and identify the right opportunity for you.  So contact us today to discuss your property goals.