Wealthy residents are mulling a home-buying spree following the Hong Kong Special Administration government’s decision to scrap all extra taxes on house purchases, according to a survey released on Monday.

Citibank Hong Kong said over 70 percent of wealthy residents — those with liquid assets exceeding HK$1.5 million ($191,000) — are showing the keenest interest.

Three categories — affluent people with children, a monthly family income surpassing HK$80,000, and previous property ownership — were found to be more inclined toward property purchases after levies were dropped

However, despite the warming sentiment, the investment bank forecasts a 10 percent drop in house prices for the year, citing high interest rates and ample new home supply as the chief factors.

READ MORE: HK agents say property deals jump after big policy moves

The survey found that compared to the general respondents, 72 percent of affluent people expressed a greater interest in buying properties, with the primary motivation being investment, supporting their children, and generating rental income.

In contrast, only 6 percent of those surveyed indicated less interest in property purchases following the lifting of stamp duties.

Three categories — affluent people with children, a monthly family income surpassing HK$80,000, and previous property ownership — were found to be more inclined toward property purchases after levies were dropped.

Looking ahead, more than 60 percent of wealthy respondents anticipate a rise in housing prices over the next 12 months.

“The survey results reflect a positive sentiment among the public toward the property market after all the cooling measures have been lifted in February, boosting optimism among potential home buyers,” said Josephine Lee, managing director and head of Citigold, cards and unsecured leading sales at Citibank Hong Kong.

Citibank Hong Kong conducted the online survey in April among 500 Hong Kong residents aged between 21 and 60, with monthly household incomes of HK$40,000 or above, who were aware of the withdrawal of the property market’s cooling measures. Of these respondents, 200 were classified as wealthy people.

The price index for private domestic homes rose by 1.06 percent month-on-month in March, marking the first growth after 10 consecutive months of decline, per the data from the Rating and Valuation Department

Analysts said in the medium to long term the trajectory of Hong Kong’s housing market transaction volume hinges on interest rate fluctuations.

Citibank expects the US Federal Reserve to cut interest rates four times starting from July, each time by 0.25 percentage points, bringing the upper limit down to 4.5 percent.

Lee cautioned that local banks might not immediately reflect these cuts in their prime rates. As a result, she estimates that significant interest rate adjustments in Hong Kong are unlikely to materialize until after 2025.

“However, the survey suggests that people with strong financial standing, who aim to elevate their living standards or acquire properties for long-term investment, are less affected by short-term fluctuations in property prices when considering their property purchases,” Lee noted.

Rosanna Tang, executive director and head of research in Hong Kong at Cushman & Wakefield, said “If the market expects interest rates to peak and the rate hike cycle to end in the second half of this year, it could buoy buying sentiment.”

Tang added that conversely, anticipation of further rate increases later this year might weigh on transaction volumes.

The SAR government decided to remove the Special Stamp Duty, Buyer’s Stamp Duty and the New Residential Stamp Duty payable for homebuyers on Feb 28 in the 2024-25 Budget as part of efforts to boost the property market.

READ MORE: Scrapping property curbs seen boosting HK's housing market

According to the Land Registry, sales of new and second-hand homes surged 115 percent to 8,551 units in April from March.

The price index for private domestic homes rose by 1.06 percent month-on-month in March, marking the first growth after 10 consecutive months of decline, per the data from the Rating and Valuation Department.

The average price per square meter for housing units ranging from 70 to 99.9 square meters in Hong Kong’s Kowloon district jumped from HK$157,507 ($20,153) in February to HK$159,706 in March.

Contact the writer at tianyuanzhang@chinadailyhk.com