Since May, the transactions in the first and second-hand property markets have dropped sharply, and property prices have been continuing to fall slowly. The industry insiders have been urging the government to withdraw the government's spicy measures to save the weaken market. The government has declined the request, resulting in a great disappointment to industry practitioner. The government appears to ignore the plight of the industry. On the other hand, the government responds directly to speed up the approval process and reduce the upper limit of applicants of Admission scheme for Mainland Talents and professionals. This scheme is intended to replenish the brain drain caused by the mass emig
rant wave.
The government announced that 50,000 applications had been approved in the first half of this year, and these batches of approved applicants have been relocating to Hong Kong since then. At the same time, residential rents have been increasing for six consecutive months. Therefore, the rental rate of small and medium-sized residential units has been risen to 3%.
The priority of the approved applicants is to rent premises. Therefore, the shortage of residential units is a genuine issue. As a result, the rents consistently surge when the demand exceeds supply.
According to this trend, it is estimated that the approval process of Admission scheme will be accelerated in the coming months. The approval applicants may be increased to 80,000. If this is the case, the higher rents will be anticipated. Finally, the rents will increase 5% in the second half of this year.
If property prices fall by another 3%, the return rate can rise to 3.5%. This rental return rate can cause hesitant tenants to switch from renting to purchasing. Additionally, the U.S. Federal Reserve may only increase interest rates once more before the end of the year, which is beneficial for the potential housing buyers.
Furthermore, the government's Admission scheme will be firmly implemented in near future. On the one hand, talents continue to flow into Hong Kong, and on the other hand, the number of emigrants has passed the peak period. When the numbers of immigrants and emigrants are equal, the oversupply housing market caused by emigrants listing will be compensated by the increased demand of the new immigrants. It is anticipated that the negative impact of the emigrant's listings should be reduced to lower levels in the end of this year. If a more optimistic situation emerges, the oversupply situation in the property market will gradually be disappear, and property prices are expected to bottom out.
