Property valuation may fluctuate in an unstable market


The pandemic of COVID-19 has dealt a serious blow to the economy of Hong Kong and its property transactions. An unstable market situation and the decline in the number of transactions have also led to fluctuation of property prices. Prospective buyers should note that banks may tighten their mortgage approval criteria and they may not be able to obtain sufficient mortgage loans to complete their purchase due to a shrink in their property valuation.

This is of particular concern to purchasers of uncompleted first-hand residential properties if they choose to pay the purchase price upon the completion of their properties. They should take into consideration that the amount of mortgage loan they could obtain in the future may be affected if the market outlook is uncertain. If the property value falls below the transaction price as stated in the agreement for sale and purchase, or if the bank has tightened its mortgage approval policies at the time when the property is completed, purchasers may not be able to obtain a sufficient amount of mortgage loan and may need to pay a larger sum of the balance of purchase price in order to complete the purchase.

In the course of promoting properties to their clients/prospective buyers, estate agents may provide information about mortgage financing. If they do so, they are required to follow the relevant guidelines of the Estate Agents Authority (“EAA”) and must not provide any inaccurate or misleading information to their clients/prospective buyers, or assure their clients/prospective buyers that a mortgage loan would be obtained, or make any guarantees on the terms of a mortgage loan. Instead, estate agents should advise their clients/prospective buyers to consult banks or financial institutions directly. Any licensed estate agent who makes a representation about a mortgage loan without proper basis may be disciplined by the EAA.

As purchasing property is a long term investment, I would like to remind all prospective buyers that they should consider various factors carefully, such as repayment terms and their current and future repayment ability, before making any purchase decision. In addition, as the approval criteria, the incentives offered by and the mortgage terms of different banks can vary, purchasers should also make enquiries with the lending institutions directly.


Ruby Hon
Chief Executive Officer
Estate Agents Authority