Hong Kong’s Secondary Homes Market at 2017 Levels
Prices of lived-in homes have retreated 6.1 percent in a 10-week losing streak, and by 11.2 percent since the market peaked in August 2021. Recent transactions in popular housing estates in Taikoo Shing, Shau Kei Wan and Tseung Kwan O show ongoing bearish sentiment. Property investors thinking of getting ahead of the full reopening of Hong Kong’s economy may have to rein in their enthusiasm. Further interest-rate increases are likely to depress home prices in the coming months to levels last seen in 2017. While local authorities have scrapped mandatory quarantine for incoming travelers and lowered the bar on mortgage stress tests, the pressure from policy tightening in the US will mount amid attempts to cool runaway inflation. A steady decline in the local housing market over the past 14 months will play out for longer. Lived-in home prices in Hong Kong fell by 0.8 percent in the most recent week. It has retreated by a cumulative 6.1 percent in 10 straight losing weeks, and by 11.2 percent from the record-high in August 2021. Recent transactions in major estates on Hong Kong Island, such as Taikoo Shing, indicate prices have reached a five-year low, while one flat in Shau Kei Wan changed hands for a HK$3 mn loss. “The pandemic has not yet subsided and the timing of the full border reopening has not yet been determined,” said Sammy Po Siu-ming, CEO of Midland Realty’s residential division for Hong Kong and Macau. “Some buyers and owners are still waiting to see the effectiveness of the new Covid-19 measures. Home prices will continue to be under pressure.” The outlook for the market may improve when the government unveils its plans during the annual policy address on October 19, Po added. Lived-in home prices could fall by as much as 6 per cent by year-end to the lowest since October 2017 without policy support. The Hong Kong Monetary Authority (HKMA) has lifted its base rate five times this year to 3.5 per cent, a 14-year high, in lockstep with the hawkish Federal Reserve hikes. Commercial banks including HSBC and Bank of China (Hong Kong) raised their prime rates last week to a four-year high, making it costlier to fund big-ticket purchases like housing. Hong Kong property prices are under pressure in the short term because of the overall market sentiment globally in stock markets,” said Raymond Cheng, Managing Director at CGS-CIMB Securities. “It may not be surprising to see home prices fall a further 5 to 10 percent” with short-term rate and emigration pressures, he added. The number of lived-in home transactions is likely to shrink this quarter to about 6,800 deals, the least since the 5,159 recorded in the fourth quarter of 2018. Banks remained cautious on the outlook for prices of lived-in homes.”
Tags : Prices homes housing estates property investors Hong Kong economy authorities travelers Hong Kong Monetary Authority Raymond Cheng Managing Director CGS-CIMB Securities