Consumer confidence in buying property remains strong despite 73% of consumers reporting negative impact on family income

Blog Post10/15/2020
Personal Finance
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New data from TransUnion’s Global Consumer Financial Hardship Survey Report shows that Hong Kong consumers are experiencing mounting financial pressure under the corona virus.

New data from global information and insights company TransUnion’s (NYSE: TRU) Global Consumer Financial Hardship Survey Report shows that Hong Kong consumers are experiencing mounting financial pressure under the corona virus pandemic. 73% of consumers said their family incomes have been negatively impacted. Nonetheless, TransUnion’s Q2 2020 Industry Insights Report shows that consumers have regained confidence in buying property, with mortgage enquiries increasing 10.2% year-on-year, suggesting that some consumers are buying within their means to avoid falling into financial distress.

Since April, TransUnion has been regularly surveying consumers in Hong Kong to understand the financial impact of COVID-19 on household incomes in its Global Consumer Financial Hardship Survey Report, with the latest findings collected from the end of August until early September, during which 73% of Hong Kong consumers reported that their family incomes have been negatively affected. Furthermore, TransUnion’s Q2 mortgage data reveals that Gen Z (born 1995 or after) respondents are experiencing the greatest financial impact of the pandemic (76%). Employment-wise, the study has found that 20% of Gen Z respondents have been laid off from their jobs, while 60% of Millennials (born between 1980-1994) have experienced shortened employment hours.

Hong Kong consumers regain confidence in buying property

Despite many experiencing a decrease in income, consumers have now regained confidence in their ability to buy property compared to at the beginning of the pandemic. TransUnion’s Q2 2020 Industry Insights Report has shown that mortgage enquiries have risen 10.2% year-on-year in the second quarter. When comparing the number of mortgage enquiries across different generations, TransUnion’s Q2 mortgage data further shows that Gen X (born between 1965-1979) recorded a 19% quarter-on-quarter increase of 15,508 enquiries, while Millennials reported an even greater increase of 30.3% to 21,682 enquiries. However, mortgage enquiries are still down compared to Q2 of the previous year. Mortgage enquiries from Gen X consumers recorded a significant drop of 31.6%, while those from Millennial consumers showed an 8.5% drop, demonstrating that confidence in buying property has not been completely restored. Gen X consumers display even more cautious attitudes towards buying property.

Rise in mortgage delinquencies shows more caution required from property buyers

Maintaining a certain level of caution towards buying property is essential. TransUnion’s Q2 2020 Industry Insights Report reveals that mortgage delinquencies for the first half of the year are on the increase, showing a year-on-year growth of 1 bp in the second quarter. Similarly, when comparing different generations, TransUnions’ Q2 mortgage data shows that the total number of Gen X consumers defaulting on their mortgage loan payments increased 41% from 302 in Q2 of the previous year to 426 this year. Millennials showed a 72% increase over the same period from 107 to 184 cases. The data shows that in the face of unstable economic conditions, consumers intent on entering the property market should continue to stay alert.

“Buying property means embarking on a new stage in life. Millennials and Gen Z consumers should carefully assess their ability to repay their credit loans to avoid missing their mortgage payments,” said Marie Claire Lim Moore, CEO, Hong Kong, TransUnion. “Our data is showing the financial uncertainties being brought about by the coronavirus pandemic. Defaulting on mortgage repayments lowers credit rating scores which has a long-term impact that could have repercussions on future investments.”

 

Editor’s notes:

1 Millennial: Defined as those born between 1980 – 1994

2 Gen Z: Defined as those born 1995 or after

3 Gen X: Defined as those born between 1965 – 1979

4 Baby Boomer: Defined as those born between 1946 – 1964

 

 

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