June’s mortgage loans see mixed results

The Monetary Authority (AMCM) reported that new approvals of residential mortgage loans (RMLs) increased in June compared to the previous month, while commercial real estate loans (CRELs) declined.

Outstanding balances for both RMLs (Regional Multiple Listing Services) and CRELs (Commercial Real Estate Loans) decreased on a monthly basis.

According to figures the AMCM released Friday, new RMLs approved by Macau banks rose 17.1% month-over-month to MOP1.20 billion in June.

New RMLs to residents, which made up 97.6% of the total, grew 16.8% to MOP1.17 billion. The average of new RMLs approved between April and June was MOP1.20 billion, up 8.9% from the prior period.

In contrast, new CRELs decreased 24% month-over-month to MOP2.20 billion.

New CRELs to residents, 99.5% of the total, fell 24.1% to MOP2.18 billion. The average of new CRELs approved between April and June was MOP2.11 billion, up 30.6% from the previous period.

During its mid-year press conference last month, Jones Lang LaSalle (JLL) said the anticipated revitalization following the lifting of government cooling measures has not materialized.

Home prices have dropped as potential buyers contend with rising borrowing costs and tightened mortgage conditions, which have particularly impacted first-time buyers.

Mark Wong, director of Value and Risk Advisory at JLL, noted last month that high-interest rates are constraining short-term property investment returns, leading to a cautious approach among investors.

The residential sector’s transaction volumes fell 12.7% year-over-year, with only 172 presale homes recorded in the first half of 2024.

While gaming revenue surged 41.9% year-over-year, nearing pre-pandemic levels, this economic rebound has yet to translate into a recovery for the property market.

JLL’s general manager in Macau and Zhuhai, Oliver Tong, told a press conference developers are adopting conservative pricing strategies to stimulate sales, aligning new property prices with those in the secondary market.

As of end-June, the outstanding value of RMLs was MOP224.67 billion, down 0.5% from the prior month and 3.9% year-over-year. Outstanding CRELs fell 1.2% month-over-month and 5% year-over-year to MOP154.03 billion.

The delinquency ratio for both RMLs and CRELs was 3.5% at the end of June.

Despite the challenging real estate market, there are signs of recovery in other areas, such as improving employment rates and a rebound in tourism, which could eventually benefit the property market. Nadia Shaw