Since September, the real estate industry is anxious to anticipate the Federal Reserve Board's decision to cut interest rates. Once the interest rate reduction is confirmed, Hong Kong follows suit. In this situation, the buyers have more confidence to return to the market. As a result, the property market bounces back after hitting the rock bottom. This anticipation is a sweet dream, but the reality is always cruel. If the market does not respond to the rate reduction, the developers and the property agencies firms will suffer a severe fiscal crisis.
In fact, the structure of Hong Kong economy has been changing. The interest rate hike was only one factor to deter the economic recovery. Thus, Fed reduces the interest rate that is not enough to reverse the general trend. Many developers are already in a critical situation. The two major property agencies firms are also in trouble.
This interest rate reduction has been discussed for months, and the market has been extensively discussed, so even if Hong Kong 
cuts interest rates, the effect will not be noticeable. After the rates were cut, the transaction volume may increase by ten to twenty percent in short term. The property prices will not be significantly changed. Therefore, the prices and volumes will return to fall again several weeks after the interest rate cut. In this situation, developers and large agencies firms may fall in a fiscal crisis.
A major developer on the verge of bankruptcy has been widely reported and will not be repeated to discuss again here. As for the two major agency firms, they have recently laid off staffs in a low-key manner, and some senior executives have been persuaded to leave. If transactions remain sluggish until the end of this year, the two major agencies firms will conduct large-scale layoffs to keep the firms alive.
The two major agencies firms had been prepared for a large scale of layoffs early of this year. Fortunately, the withdrawal of cooling measures from March revived them from the downturn market. During this short-term rebound, the transactions and prices of first and second-hand property prices rose, saving a large number of agents who were ready to be fired.
This time, the interest rate cut will not easily yield the same market reaction in March. Therefore, the two major agencies firms need a contingency plan to cut the branches massively next year.
The market share of the two major agencies firms has reached 70%. Due to the recent sharp decline in transactions, it will not be able to maintain the staff number of seven hundred branches of these two major companies even their market share to increase significantly.
The wave of shops closures in the catering and retailing industry has already been beginning and the next wave will be delivered to the leading agencies firms. Even if both of these firms can survive, the number of branches to be cut will account for at least half of the total. Small agencies firms have been operating in a small scale, so they have less pressure to cut branches. Whatsoever, small firms will also be eliminated from the market in certain.
