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Mortgage Rate Cut Fuels the Residential Market Movement
27 Feb 2007

Some 2 weeks ago, HSBC suddenly announced to cut their mortgage rate to P- 2.88% (ie 4.87%) in an attempt to win back the market share of the mortgage market. Since then many Hong Kong banks have joined the mortgage rate cut war, noticeably, Bank of China, Hang Seng , Bank of East Asia, Wing Lung, DBS. It is predicted that some of the aggressive banks in Macau would cut their mortgage rates should they wish to win a bigger piece of cake in the mortgage market. If this is the case that would be a great news for the Macau property market, which has the effects of strengthening the market sentiment and luring both the home buyers and investors to enter the market swiftly.

According to Mr Jimmy Yeung, District Director of Midland Realty (Macau) Ltd, the market has been going strong and strong following last year's good sale due to the ever raising economic growth, end of raising interest rate cycle, blooming stock market, raising Gaming tax… etc. leading certain home owners as well as developers to believe that residential properties would go up in prices in the light of declining interest rate in future. In absence of many choice for new developments, some investors even have started to look around for quality second hand properties. Apparently, this temporarily shortage of supply is largely because of the unwillingness of the developers to release their developments in any large scale.

With a few more developments going to be released in the 2nd quarter of this year. The volume of transactions will exceed last year's. Mr Yeung reiterated that in a blooming economy coupled with mortgage rate cut, the market sentiment should be good and the property price would gone up eventually. Some property owner even withdrew from the market and waiting for better opportunity before putting their property on the market for sale.

In general, price for properties in Central or Nam Van area is about $22,00, NAPE is $1500-1900, brand new property in Pearl Oriental (or North district) $2,300- 2,600 whereas Horta E Costa area is $1,800. In Taipa, quality flat is $1800-3000, and second hand market is $1300-1500. It is interesting to note that the accommodation value (AV) for most land price is over $1,400/sqft. In other words, bread is not much expensive than flour!

By the completion of Cotai City towards the end of this year, there would have been considerable change in property market in that many well known estates would have increased in prices. Lastly, Mr Yeung said " Given there have been many good news, there is no reason that the market would not go up."

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