Hong Kong property agents may lose jobs on curbs
About a third of Hong Kong’s property agents may lose their jobs over the next year if the government persists with its real estate curbs, according to realtor Midland Holdings.
“For the industry, we’re probably looking at the lowest point for over two decades,” Angela Wong, deputy chairman and the daughter of Midland chairman and founder Freddie Wong, said. “The worst thing is that it’s now a stagnant market so we’re not sure whether we should expand or contract. This is tough.”
Home prices have more than doubled since early 2009 on an influx of mainland Chinese buyers, near record-low interest rates and a lack of new supply, prompting the government to introduce a raft of measures to quell concerns of an asset bubble. The total number of property deals has probably fallen 44 per cent to 13,960 in the second quarter from the previous three months, the lowest level since 1991, according to Midland.
There were 37,016 individual real estate agents and sales- person license holders in the city at the end of May, up from 34,919 a year earlier, according to government figures. Midland had 8,110 sales staff at the end of 2012, according to its annual report. The company declined to provide updated figures.
The loss of agents “is only the first phase,” Wong said in an interview in the city on June 27. “And it’s not just the agents, but developers, lawyers and the advertisers as well. Every profession related to the real estate industry is crying for help.”
Shares of Midland, which has about a 30 per cent market share of all property sales in Hong Kong, have declined 21 per cent since July 1, 2012, when Hong Kong Chief Executive Leung Chun-ying was sworn in after pledging to bring home prices down to more affordable levels. The benchmark Hang Seng Index has gained 7 per cent during the period.
Midland rose 0.7 per cent to HK$2.92 at 10:53 a.m. local time today.
Since taking over, Leung has imposed extra taxes on non- resident homebuyers, doubled the stamp duty on all property transactions, raised minimum mortgage down-payment requirements, and sped up the approval process of new home sales permits for developers.
The government won’t ease the curbs until there’s a steady supply of new properties, Leung said in an interview with Bloomberg News in June. Financial Secretary John Tsang said the city may introduce more curbs if needed, the Hong Kong Economic Journal reported today.
To counter the measures, Midland has in the past year encouraged its agents to look for transactions across different classes of properties, and to help Hong Kong investors buy overseas properties, Wong said. It is also shifting many of its more than 380 branches to “less expensive locations” to cut costs as retail rents in the city rise, she said.
Hong Kong’s home prices, the world’s highest according to Savills Plc, have fallen 2 per cent from a historic high in March, while transactions have been near the lowest level since early 2009.
Midland will probably post a loss in the first half, Alfred Lau, a Hong Kong-based analyst at Bocom International Holdings, wrote in a June 25 report, citing the impact from the government’s curbs. He has a sell rating on the stock.
The company’s profit in 2012 rose 87 per cent to HK$250 million (US$32 million).