Upbeat estimates for the Hong Kong stock market could attract real estate traders to the equities market, as higher initial down payments and additional stamp duties threaten to squeeze returns on property.
After the announcement of the tax and credit measures in November to curb speculation in property, analysts have cautioned that they could put a limit on the increase in home prices.
“Since the government imposed heavy measures to penalise the quick resale of residential units, I have switched to buying stocks since their transaction costs are much lower,” said property investor Jan Lai, who amassed a real estate portfolio worth about HK$1 billion (RM403.69 million) in 2005. Lai said home prices had increased sharply and yields had been squeezed substantially.
“The properties I bought earlier I will keep for leasing. I will not sell unless a reasonable offer is received,” he said.
“The transaction costs for buying stocks are much lower and many stocks are trading at attractive valuations,” he added.
The anti-speculative measures also prompted potential homebuyers to postpone purchasing properties. Connie Cheung, a media firm executive, said under the recently announced measures, her capital would have to be locked up for two years to prevent paying the additional stamp duty.
“It would now be easier to make a killing on the stock market compared with investing in the heavily regulated physical property market. While I wait for a price adjustment in the housing sector, it would be better to buy blue chip stocks in view of greater upside potential,” she said.
Eric Yuen, research head at brokerage house GuocoCapital, said the possible inflow of capital from real estate to the stock market would have a slight impact on the equity market.