Gov’t announces debt ratio curbs for property loans

Henrietta Lau

The government announced measures to “cool down” the real estate market yesterday. Such measures, enforceable from today, will result in an adjustment of approximately 10 percent of the ratio ceilings for housing loans for non-residents and residents acquiring a second house or more.

The measures were introduced by deputy director of the Banking Supervision Department of the Monetary Authority of Macao (AMCM), Henrietta Lau, in a press conference organized by the Government’s Spokesperson Office at the government’s headquarters. 

Local residents acquiring their first house will not be affected by the changes. Lau explained that the measures aim to “control the excess of investment activity, promote the stable development of the housing market in Macau, and help banks improve their risk management.” The measures are based on government figures regarding the granting of credit for housing during 2016.

The measures include a reduction of the ratio ceilings for housing loans for non-residents and residents of 10 percent on the first three steps (houses valued in more than MOP3.3 million to more than MOP8 million) and by 20 percent on the last step of the table (house valued under MOP3.3 million) in the case of the local residents acquiring an additional house beyond their first.

The same applies for loans to acquire housing units still under construction. For such units, the ratios for non-residents or residents with more than one house will be reduced by 10 percent.

Lau explained that the criteria of “first housing unit” includes residents who do not own more than 50 percent of one housing unit, and excludes housing units granted by donation or inheritance. Couples are usually entitled to shared ownership, or 50 percent each.

An exception is also made for residents acquiring a new housing unit who intend to change their residence. Such residents have 12 months to sell their previous housing unit, commencing from the date of the new loan.

The real estate market has registered “adjustments from the fourth quarter of 2014 having started to grow from the second quarter of 2016,” adding that, “in the first quarter of this year the value of housing units, in general, has grown 20 percent when compared with the same term of last year and 4.7 percent when compared with the last quarter of last year.” According to Lau, these figures justify the implementation of the measures.

Lau also noted that in 2016, residents were accountable for 98.9 percent of all transactions in the market, and in 50.7 percent of cases, those residents already possessed one or more housing units.

The representative of the Financial Services Bureau (DSF), Chu Iek Chong, took the opportunity to explain that the application to request an exemption from stamp duty tax over a property transfer can be done via a specific form from DSF, provided that the bureau is prepared to provide the document within 15 working days.

Questioned by the media about the need to support to banks in their risk management, Lau said, “There is a small number of [bad] debts and the market is healthy but still we need to act preventively.”