Citi released a research report saying that it is expected that the policy report will bring a positive situation to developers (especially those with luxury properties). Coupled with interest rate cuts, there was a rebound in turnover and new listings in October. The bank maintains a strategy based on dividends and yield as stock selection criteria, and it is expected that Sun Hung Kai Properties (00016) and Henderson Land (00012) may outperform in the short term.
According to the report, the new “Policy Address” proposes to adjust the “New Capital Investor Entry Plan” to allow investment in residential properties of 5,000 million yuan or more, and the maximum amount of total investment calculated for real estate investment is 1.0 million yuan; the upper limit of the mortgage ratio for all residential properties will be raised to 70%, and the maximum contribution to income ratio will also be uniformly adjusted to 50%; the demand for private housing is expected to be 0.132 million units in the next ten years, and plans are to provide land to build 0.08 million units over the next five years (no change); The supply of public housing increased to 0.189 million units in the 2025-2030 fiscal year, an increase of 10% over 0.172 million units in the 2024-2029 fiscal year; the target for the next ten years is to gradually adjust the ratio of public housing and subsidized sales units from the current 7 to 3 to 6 to 4; the Housing Authority is carrying out 11 redevelopment plans.
The bank believes that the above policy to support the property market is in line with market expectations and that easing the upper limit of residential property mortgage ratio is beneficial to investment demand, but it may take time to become apparent. The bank kept its forecast for a 10% drop in Hong Kong property prices this year, compared to a 7.5% drop in the first nine months, and expected property prices to bottom out in the middle of next year.
