Goldman Sachs: Hong Kong Policy Address Views on Limited Property Market Stimulus Measures to Maintain the Property Market's Upward Cycle

The Zhitong Finance App learned that Goldman Sachs released a research report saying that Hong Kong's new “Policy Address” and its first “Five-Year Plan” policies for property market-related industries are quite limited. As expected, the bank maintains the view that the Hong Kong property market will enter an upward cycle for at least the next three to four years due to supply and demand imbalances, and is still more optimistic about developers with more marketable resources and/or a sound balance sheet, including Sun Hung Kai Properties (00016), Hang Seng Properties (00012), and Credit and Capital Land (00083), each rated “buy”.

The bank pointed out that the overall policy direction of the new “Policy Address” and the first “Five-Year Plan” includes using “four centers and one hub” to enhance long-term competitiveness, deepen the integration of the Greater Bay Area, accelerate the development of the northern metropolitan area, and improve people's livelihood under “one country, two systems.” Demand-side measures mainly focus on newborn families, including extending the HK$20,000 Newborn Bonus Program for three years, increasing the bonus to HK$30,000 for the second or subsequent child, a maximum stamp duty reduction of HK$20,000 for eligible families buying a new home, increasing the child allowance, and increasing the maximum mortgage ratio for families with white-listed newborn babies from 90% to 90%.

On the supply side, the government reiterated that it will prepare about 2,500 hectares of “ripe land” over the next ten years, of which 1,400 hectares (including 900 hectares in the northern metropolitan area) will be delivered in the next five years, and 420,000 new units will be planned in the next ten years according to the ratio of 70% public sector and 30% private sector; taking into account simple public housing, the total number of public housing units built in the next five years will reach 196,000. The Northern Metropolitan Area will launch all nine new development zones, provide more than 70,000 residential units and 1 million square meters of economic floor space over the next 5 years, and promote various railway and road infrastructure; the MTR Corporation (00066) is expected to continue to speed up tenders for future land use.

The bank said that investors' prior expectations for major property stimulus were low, and real estate and leasing stocks had a weak response on the same day, remaining roughly flat to an increase of 1% to 2%. The bank pointed out that recent stock price performance is still dominated by interest rate trends, buyers' feelings about policy uncertainty, and other macroeconomic factors.