Muted outlook for Hong Kong residential in 2019
Home prices in Chinese SAR slated for significant declines in H1 2019
The Hong Kong residential property market could be entering the next year on shaky footing.
As with most other property sectors, residential has a muted outlook for the first half of 2019, according to the latest outlook by Cushman & Wakefield. Home prices in the Chinese SAR could drop by another 10 percent next year, before finding support from sales of much discounted homes.
“We expect sales to be mainly driven by the launch of primary projects and those secondary homes at major discounts,” commented Alva To, Cushman & Wakefield’s vice president and head of consulting for Greater China.
The decline in home prices around the city began speeding up in August. Prices in the City One Shatin residential precinct have since dropped by 20 percent, while those in the Taikoo Shing estate slumped 15.7 perecent.
While the last major drop in home prices from mid-2015 to mid-2016 was fuelled by policy factors, the recent declines were more attendant on global headwinds.
“The drop is much steeper, and we expect the impact of global uncertainties, including trade tensions and rates moves, will continue to cloud the market outlook over the near term,” To said in a statement.
After China and the US escalated their trade clash this year, monthly residential S&Ps notably began dropping below 5,000 in August. Home sales had hit 18,881 S&Ps in the second quarter, a peak.
Primary sales surpassed secondary sales for the first time since late 2015, indicating that buyers preferred to be on the sideline while landlords who had reaped the profits during the up-cycle were more willing to sell on some discount, To explained. “However recent sales of primary projects are also sluggish against the weak market sentiment.”
The fourth quarter is already expected to be the slowest-performing quarter since Q1 2016. Home sales sank to 4,243 and 2,635 S&Ps in October and November, respectively.
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