MeiLian: The Fed's rate cut in September is almost certain, and the trend of "rent-to-buy" in the Hong Kong property market is expected to rise

According to the WiseFinance app, Bruce Siu Ming, the Executive Director of the Residential Department of Meilian Property, stated that the Federal Reserve announced the latest interest rate decision, keeping the rate unchanged as expected by the market, marking the 8th consecutive time the rate has remained unchanged. More importantly, the Federal Reserve hinted at a high chance of a rate cut in September. As the rate-cutting cycle unfolds, there is a chance for mortgage rates in Hong Kong to follow suit and decrease. Coupled with the continuous rise in rents, the current situation of supply exceeding demand in the rental market will gradually reverse. With the prospect of rising rents and falling interest rates, the desire to switch from renting to buying is expected to increase, providing positive support for the Hong Kong property market.

Bruce Siu Ming further believes that a rate cut in the United States in September is almost certain. Many prospective buyers are expected to anticipate a potential rebound in property prices in the future or enter the market quietly before the rate cut, which may drive residential property transactions in August. It is estimated that primary market transactions for the entire month are expected to reach around 1,000 units, while secondary market transactions are expected to be around 3,400 units.

Due to continuous influx of mainland residents renting in Hong Kong and the arrival of foreign talents for work, there is an additional demand for housing in Hong Kong. However, the supply of rental properties has not been able to keep up, leading to a decrease in available rental units and pushing up rents. On the other hand, property prices rose earlier in the year and then fell, with the post-cooling measures' gains evaporating. This has resulted in a situation where rents are rising while property prices are falling, with rental performance expected to outperform property prices this year. Currently, high interest rates, coupled with fluctuating property prices, are dampening the willingness of citizens to enter the market. However, it is believed that once the rate cut is implemented, property prices are expected to stabilize. With rising rents making renting more expensive, there will be an increase in the desire to switch from renting to buying.

With the divergence of rising rents and falling property prices, rental yields are increasing. Data shows that the rental yield for some housing estates currently exceeds 4%, such as Treasure Garden in Kowloon Bay and Golden Lion Garden in Tai Wai with rental yields of approximately 4.61% and 4.52% respectively. The rental yields of properties like The Beaumount in Tseung Kwan O, The Bloomsway in Ma On Shan, New Town Plaza and City One in Sha Tin, and Double Cove in Tuen Mun all exceed 4%. Housing estates with high rental yields are attracting investors looking for long-term rental income. If interest rates fall, it is believed that investors will accelerate their entry into the market