Hong Kong’s residential property market showed signs of improvement in the third quarter, as the crucial barometer of negative equity cases decline.
The number of negative equity loans fell 17 per cent to 31,449 at the end of September, from 37,806 at the end of June, the Hong Kong Monetary Authority (HKMA) said in a statement on Friday. The total value of residential mortgage loans in these cases fell to HK$156.8 billion (US$20.18 billion), from HK$190.2 billion three months earlier.
The figures have declined for two consecutive quarters, data shows. Compared with the first quarter’s 40,741 cases, the number of homes whose value sank below what their owners were paying for their mortgages dropped by 22.8 per cent.
“The drop in negative equity cases was primarily driven by gradually rising property prices during the quarter, which boosted valuations,” said Ivy Wong Mei-fung, managing director of Centaline Mortgage Broker. This allowed some previously negative equity properties to regain value above their outstanding mortgage balances, she said.
The property market has maintained steady improvement this year. After stabilising in the second quarter, average property prices rose another 2 per cent to 3 per cent quarter-on-quarter in the three months ended September. That led to a continued decline in negative equity figures by the end of the third quarter, according to Wong.
The three-month delinquency ratio of residential mortgage loans in negative equity remained at a low level of 0.24 per cent at the end of September, compared to 0.21 per cent at the end of June this year.
While the number of negative equity cases remained relatively high, Hong Kong homeowners’ repayment capacity had kept stable, according to Eric Tso Tak-ming, chief vice-president of mortgage broker mReferral.
