One month after the withdrawal of cooling measures, most of the property experts believed that the property market would rise steadily for sure. Until May, one expert suggested that the Central government may consider increasing the quota of visitors from inland cities and relax the limit of capital outflow to Hong Kong. Finally, the property market dropped to a lower level. Indeed, the decline of the asset value is the economic change that is unstoppable.
During the last major drop of property market between 1997 and 2003, many middle classes engaged in excess borrowing, and they eventually became bankrupt. Nevertheless, the latest adjustment is different. The oversupply is one of the root causes. Moreover, the outflow of capital is caused by hundreds of thousands of emigrants. The rapid deterioration of the internal economy is another major cause of adjustment. Foremostly, the economy has not yet fully recovered from the epidemic lockdown.
The current adjustment is different. Many middle-class families have sold their flats and relocated to foreign countries since the year 
of 2019. Those who stay behind have been holding their properties for decades. Therefore, their debt level is low. However, those properties that had been purchased by middle class in recent years had higher chance of becoming negative equity. Fortunately, the unemployment rate is still low, so there are no substantial number of middle-class going bankrupt. But If the property prices decline continuously, they will easily become poorer.
Nowadays, the situation for the rich is different. The epidemic lockdown had caused many small and medium-sized enterprises to become bankrupt, and domestic tourists who were initially the savior of the retail industry, have changed the pattern from purchasing luxurious goods to penny-pinching. Their average daily expenses fell from tens of thousands to hundreds of dollars. Conventionally, Hong Kong is proud of the capability to fund-raising for the listing companies, but its raising power has been declining in recent years. The investment banking industry suffered a huge loss of business, and it triggered a sharp fall in demands of Grade A offices in Central. In reality, the assets portfolio of the large landlords suffered a half-value depreciation.
In recent months, there have been numerous reports regarding the investors selling off their property assets at an extremely low price. In fact, many of them were forced by banks to sell and they had no choices. In fact, these investors were on the verge of bankruptcy due to excessive borrowing. Their industrial and commercial properties’ portfolio have been significantly depreciated. Due to over borrowing, the rich have a greater chance of becoming bankrupt than those of the middle class who are still fully employed.
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