An aerial view of a residential district in Hong Kong.
Chunyip Wong | E+ | Getty Images
Hong Kong’s Chief Executive John Lee is ready to address some main financial and social points that the town faces in his second annual policy speech on Wednesday.
Residents of the monetary hub are at present grappling with a slowing economic system, excessive actual property costs and falling delivery charges.
Here’s what to expect:
Ease property measures
Hong Kong is infamous for its excessive property costs — however simply this 12 months, it lost the title of being the “most costly personal property market” in Asia to Singapore.
Home costs fell 4 months in a row. The newest authorities information confirmed that housing price index stood at 339.2 in August, down 4.2% since year-highs in April and dropped 7.9% year-on-year.
As rates of interest stay excessive and analysts expect additional draw back in housing costs, calls are rising for the federal government to elevate the present property cooling measures — also referred to as the “spicy insurance policies.”
These measures are primarily totally different types of stamp duties resembling Buyer’s Stamp Duty (BSD), Ad Valorem Stamp Duty (AVD), and the Special Stamp Duty (SSD). They have been first launched in 2010 when the market was heating up amid hypothesis on residential properties that drove up costs.
“Market is speculating the federal government could calm down the BSD and the revised AVD through the upcoming policy address,” mentioned CBRE Hong Kong’s Eddie Kwok in a report, whereas anticipating the SSD to stay in place.
Kwok mentioned stress-free these measures might assist boosting transaction volumes, however residential property prices “could not change a lot.”
Boost spending and tourism
Hong Kong’s economic system can be going through some headwinds.
“Hong Kong has been going through a difficult exterior surroundings with the world economic system slowing amid excessive rates of interest,” Thomas Shik, chief economist from Hang Seng Bank advised CNBC.
The monetary hub briefly dipped right into a technical recession in 2022 whereas the pandemic restrictions have been nonetheless in impact.
He expects home demand will proceed to be the important thing driver to Hong Kong’s growth.
“The authorities is extensively anticipated to step up efforts to promote shopper spending and tourism,” the chief economist mentioned, including these proposals could embody selling an evening market, organizing worldwide seminars, implementing infrastructure tasks and so forth.
Labor scarcity, falling births
According to PwC, Hong Kong’s total vacancies within the personal sector has risen by 6.3% since December of 2022, regardless of measures introduced in final 12 months’s policy address to appeal to and retain expertise — each international or home – within the metropolis.
The consultancy agency mentioned in a latest report that this “significant labor shortage” is the results of a surge in emigration, in addition to international competitions for skills, low delivery charges and a shift in demographic.
A nurse examines new born chinese language childs with their mums on the Queen Elizabeth Hospital on 30 April 2012 in Hong Kong.
Victor Fraile Rodriguez | Corbis News | Getty Images
In reality, Hong Kong has the bottom fertility fee on this planet, according to World Bank information in 2021, with 0.8 births per girl. That’s in contrast to 1.1 in Singapore and 1.7 within the U.S.
To sort out the issue, local media reported the Hong Kong leader could take into account giving 20,000 Hong Kong {dollars} ($2,556) to the household of each new child child within the territory, if a minimum of one of many mother and father is a everlasting resident.
By providing enticing incentives … Hong Kong can re-establish itself as a pretty vacation spot for each native and worldwide expertise.
PwC additionally beneficial the federal government ought to present assist to full-time mother and father to allow them to return to the work pressure.
“By providing enticing incentives resembling tax advantages, industry-specific subsidies, coaching and upskilling, schooling assist, Hong Kong can re-establish itself as a pretty vacation spot for each native and worldwide expertise,” mentioned PwC Hong Kong’s personal shopper providers associate Wise Lam, in a press release.