New border-crossing measures boost house buying confidence

Liu Cheng Kun (right)

The latest figures of the Macau consumer confidence index (CCI), published yesterday by the Macau University of Science and Technology (MUST), showed a 19.6 percent surge in the sub-index of house purchasing in the fourth quarter of last year. Scholars participating in the preparation for the CCI attributed the rise to the change of border-crossing arrangements and the economic slowdown. Nevertheless, they predicted that the rise of the sub-index may be short-lived, as residents may digest the beneficial information quickly.
The MUST Institute for Sustainable Development conducted the survey between December 16 and 22 and interviewed 1,009 local residents above the age of 18. The results indicated that the CCI for the last quarter of the year rose 2.7 percent to 87.4 compared to the third quarter of last year. This means that residents have a higher confidence in general but the figure still hovers below the 100 point benchmark.
Among all the sub-indexes, the jump of the house buying sub-index is highlighted. The sub-index has followed a continuous trend of dropping since Q1 2013. In Q3 2014, it was 38.3 and the number increased to 45.8 in the last quarter. Despite the considerable rise, the sub-index was still significantly below the 100-point threshold. This indicates Macau residents’ obvious lack of confidence in buying houses.
Dr Liu Cheng Kun, the head of the department of accounting and finance in the MUST School of Business, said that the major factors behind the boost is the recently implemented 24-hour border-crossing at the Hengqin Checkpoint and the Zhuhai-Macau Cross Border Industrial Zone, as well as the extension of border-crossing hours at the Border Gate checkpoint. He also named the decline in the region’s gaming revenue as a factor contributing to the rise. “These have considerably relieved the upward pressure of the housing prices in Macau, which is shown by the fact that consumers have a relatively large increase in house buying confidence compared to the previous figures,” he said.
However, Liu predicted that the house buying sub-index may not see another significant surge in this quarter, as there may be no other good news to support the positive sentiment of the consumers. He said that while the housing supply in Hengqin and the policy to allow vehicles with Macau license plates to enter Hengqin may have a short term effect on the local housing prices, “this kind of news is likely to be digested pretty quickly.”
“If this kind of positive news is digested by the consumers, and the drop of gaming revenue does not further intensify, I think there may not be another rise of close to 20 percent in the housing buying sub-index in this quarter,” he declared. The scholar added that the long-term solution for the housing problem in Macau relies on the improvement in local , including the housing supply and income of residents.
Other rising indexes include the sub-index of employment, which has moved up by 0.6 percent to 124.9 and remained the highest amongst all the sub-indexes. The sub-indexes of living quality and commodity, which reflect residents’ sentiments regarding the pressure on livelihood, also increased by 2.5 percent and 0.2 percent respectively. This means that residents are expecting a weaker inflation, relieving the pressure on living.
The only sub-index that has recorded a drop is the sub-index of the local economy, which has slightly decreased by 0.2 percent to 108.6. Despite the drop, Dr Liu said that Macau residents remained confident in the territory’s economy because the figure is still above 100. “This 0.2 percent movement is, to some extent, a matter of data and does not reflect whether the residents have changed their perspective on the economy,” he said.