The Hong Kong Monetary Authority announced that the number of mortgage cases increased to 40,713
The Hong Kong Monetary Authority recently announced that the number of "negative equity" mortgage cases increased significantly from 30,288 at the end of the second quarter of 2024 to 40,713 at the end of the third quarter, an increase of 34%. The number is also a new high in 20 years, and the amount involved is from 155 billion yuan increased to 207.5 billion yuan. The sharp rise in negative equity figures in one quarter has naturally caused a discussion in the market.
Monetary Authority says negative asset delinquency ratio remains low
The Hong Kong Monetary Authority also provided reassurance, saying that the delinquency ratio of negative assets is still very low, and that the phenomenon of negative assets caused by falling property prices is foreseeable, and the public does not need to worry too much.
Is it a suitable time to "get the bottom" when purchasing goods?
Is this the right time to “get the bottom” and stock up?
The number of negative equity in Hong Kong’s property market continues to rise
According to data from the Rating and Valuation Department, Hong Kong property prices reached a historical high in September 2021, and the number of negative equity has gradually increased since then. By 2022, the number of negative equity cases has increased to 12,000 cases, involving a total amount of 66.2 billion yuan; and in 2023, the number has increased to 25,000 cases, involving a total amount of 131.2 billion yuan. This year, it has never fallen below the 30,000 level. In the third quarter, it rose to the 40,000 level, involving a total amount of NT$207.5 billion. Compared with two years ago, the amount involved has increased more than three times, showing that the situation is deteriorating at an alarming rate.
Among negative equity cases, SARS accounted for only 0.13%
The Hong Kong Monetary Authority explained that the main reason for negative equity is that owners use mortgage insurance to enter the market and have higher mortgage ratios. Therefore, once property prices fall, they will turn into negative equity. Of course, many of them were loaned by bank employees with higher mortgage ratios. Compared with the SARS period in 2003, the level of 40,000 negative equity cases is actually not too high.
A review of traditional Chinese and Hong Kong mortgage markets
Looking back, there were 83,000 negative equity cases in the first quarter of 2003, involving a total amount of NT$135 billion. In the second quarter, the number of negative equity cases increased to 100,000, involving a total amount of NT$165 billion, far exceeding today's levels. Comparing the disparity in the number of cases, even if the amount involved is relatively high, it is not "too scary". Another important point is that the current delinquency ratio is only 0.13%, while the delinquency ratio for more than three months that year was as high as 2.56%. Therefore, in terms of data, the current number of negative assets and delinquency ratio levels believe that it will not be easy for banks to call loans.
The owner has the ability to repay the loan on time
At present, most property owners are still able to repay their loans on time. Because of this, as long as the unemployment rate and the economic environment do not appear unusual, and the delinquency rate does not increase significantly, even if the number of negative equity continues to rise in the future, it means that the risk of the housing market is still not high. Compared with the unemployment rate during SARS, which was between 7% and 8%, the current situation does not sound a "warning signal".
Bank call loan costs are high
On the other hand, the cost of banks calling loans on residential properties is very high, and there is no doubt that this move will have an impact on the real estate market. For "creditors", the decline in asset values caused by call loans is actually "even more hurtful", and the government also Wouldn't like to see this happen.
Property market stabilization strategies
If property prices fall further in the future, it is expected that the authorities will continue to launch various measures to stabilize the property market. The public does not need to worry too much.
The opportunity to catch the bottom
As for evaluating whether the current time is suitable for "catching the bottom", it depends on whether readers think that property prices are at a "reasonable" level, as well as their future life plans. The author believes that given the current situation, if you take a "too indifferent" view of the property market, you may miss the opportunity to enter the market at a low level.