Real estate slowdown threatens more jobs
Updated: 2008-11-11 07:33
By Louise Ho(HK Edition)
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Up to 20 percent of real estate agents from small and medium-sized agencies may throw in the towel in the next three months if banks continue to be reluctant to lend to property buyers, associations of these agents warned yesterday.
Of the more than 4,000 estate agents in Hong Kong, more than 3,000 work for the small to medium-sized agencies.
The remaining 1,000 are with the "big four" estate agents - Midland Realty, Centaline Property Agency, Ricacorp Properties and Hong Kong Property.
The Joint Council of Estate Agents Associations, formed by six estate-agents associations, said many buyers can't buy property because banks have tightened mortgage loans amid the financial tsunami.
Banks give a lower evaluation to a property and raise the interest rate, said Lawrence Wong, president of the Hong Kong Chamber of Professional Property Consultants.
"Property transactions have dropped 50 percent because buyers can't borrow money from banks," he said.
He noted that only one out of three potential buyers could get a mortgage.
Banks' tightening of mortgage loans has stopped newcomers from entering the property market, as they can't afford to buy property when prices were still high a few months ago, Wong said.
Business for estate agents is so bad that a survey by the Hong Kong Real Estate Agencies General Association revealed 80 percent of the 165 small and medium-sized estate agencies interviewed recorded no property transactions in October.
Those estate agents have to rely on the rental market to survive.
Property Agencies Association Chairman Tony Kwok warned that if the bad property market persists, he expects 10 to 20 percent of small and medium-sized estate agents to close down in three months.
When asked if the estate agents will cut down operation costs, perhaps by freezing commissions for three months, he said commissions aren't the reason for the drop in property transactions - the tightening of bank mortgage loans is.
To boost the property market, the estate agents associations also suggested the government encourage the purchase of second-hand Home Ownership Scheme (HOS) flats.
HOS flats are subsidized public housing to assist low-income residents in buying their own home.
The associations suggested that the government provide 95 percent of the mortgages for HOS flat owners for 35 years.
(HK Edition 11/11/2008 page1)