In view of the gloomy economic outlook, the Government has adjusted downward the expected GDP growth rate for 2001 from 3% to 1%. The seasonally adjusted unemployment rate of 5.3% for the period from July 2001 to September 2001, was higher than 4.9% for the period from June 2001 to August 2001. The number of transactions recorded in the Land Registry in July, August and September were 7,330, 7,833 and 6,734 respectively. These figures represent respective decreases of 35.7%, 31.3% and 40.9% as compared with the figures in March, which is the highest for this year. Following the 3 US interest rate cuts, the prime lending rate declined from 6.75% to 6.0% in Hong Kong from July to September 2001.
Given the depressed economic climate, the rate cuts and the accession to WTO for China will not enhance market sentiment your property’s estimation Meanwhile, the lack of activity in the leasing market can be attributed to the seasonal slowdown in demand. Rentals and prices have dipped slightly in this quarter despite the three rate cuts. The decline caused buyers and investors to be increasingly cautious, especially after the recent terrorist attack.
The sales market for mass residential remained in the doldrums though the Government announced the suspension of sales for Home Ownership Scheme flats until June 2002, and the increase in the quota of Home Purchase Loans Scheme from 4,500 to 16,500 for first- time buyers.
Neither the competitive prices offered by the developers nor the attractive mortgage packages offered by the banks could draw buyer interest. As a result, sales activity declined and the market is expected to remain quiet, as most buyers anticipate an economic recession following the US terrorist attack.
Overall, the depressed economic climate will continue to dampen sales market with activity concentrating on mortgagee in possession properties. The interest rate lowered to a historical record level, could not uplift the economy.