Cooling measures unlikely to cause sharp spike but would attract buyers in ailing market

The removal of cooling measures is unlikely to cause a sharp spike in property prices. Rather, according to realtor Centaline, it should attract more buyers into the market.

This comes as the government announced its plans to lift real estate cooling measures as the market has been failing to improve transactions. The proposed scrapping of these measures includes exempting second homes from a 5% stamp duty and reducing the residential mortgage cap to 70%.

“The withdrawal of the cooling measures in Macau is primarily an adjustment in response to market developments,” Stanley Poon, managing director at Centaline Macau, told the Times yesterday on the sidelines of a press conference.

“The Macau government initially introduced these measures with the intention of removing them, but the market did not respond very strongly to the initial steps,” Poon explained.

Poon believes the new, more comprehensive plan to remove the cooling measures is expected to have a greater impact, providing a boost to investor-buyers. “Buyers will be able to save on stamp duty, the caps on bank mortgages have been adjusted, and some additional stress tests have been cancelled. This will provide a good opportunity for many people who want to enter the Macau property market, including foreign buyers, local residents and non-Macau residents.”

“The removal of the cooling measures is likely to release pent-up purchasing power and attract external investment into the Macau real estate market,” Poon added. “This will give developers and property owners a chance to sell their properties, even if they have to accept lower prices or some losses.”

The property market in Macau has been sluggish in the first quarter of 2024, with transaction volumes declining 44% year-over-year. Prices have also come under pressure, with the average price per square meter dropping by 2% compared to the previous year.

“Many developers took advantage of this slowdown to offer discounted sales and promotions to clear inventory,” said Roy Ho, principal director at Centaline Macau.

“For example, one developer launched new ‘metalworking’ units in March with prices starting at 7,700 yuan per square meter, a significant 30% reduction compared to the same type of unit two years ago,” he added.

These price cuts have helped stimulate some market activity, but the overall outlook remains cautious. The potential removal of the cooling measures could have a more significant impact on the Macau property market in the coming months.

“This policy decision indicates that the Macau government is cognizant of the current state of the overall society and market and has chosen to act by removing the cooling measures,” Poon concluded.

The news comes as the property market in the neighboring Zhuhai Hengqin area has shown signs of a strong recovery. In the first two months of 2024, the total pre-sale area of commercial buildings in Zhuhai Hengqin increased by around 28.2% year-on-year, while residential pre-sale area decreased by 5.4%.

“The sales area of commercial housing in Zhuhai also saw increases in various sectors (residential +20.1%, office +178.4%, commercial +231.7%) during the same period,” said Ho.

However, the impact of the proposed abolition of the real estate demand management measures in Macau remains to be seen and could affect the overall property market trend in the second quarter. Staff Reporter