Trade tensions and rising interest rates put the brakes on sprialling property prices
HONG KONG, CHINA - Media
OutReach - 24 September 2018 - Housing prices across Hong Kong are expected to
fall over the next three months, following two years of continuous growth,
according to the newly published RICS Hong Kong Residential Market Survey.
Anxiety over US-China trade tensions, predicted interest
rate hikes and concerns over already elevated property prices are now expected
to stifle growth, as respondents
reported the first dip in buyer demand in two years.
Published monthly by RICS (Royal
Institute of Chartered Surveyors), the Hong Kong Residential Market Survey
provides valuable insights into professional sentiment in the city's
residential sales and letting markets, by aggregating the reports of experts in
Respondents to the most recent survey reported a "considerable" slowdown in property inflation in
data shows that buyer enquiries from both investors and owner occupiers fell throughout the calendar month.
This cool down was particularly acute in Kowloon and Hong Kong Island,
where a balance of more than one in five contributors reported fewer enquiries
from new buyers. A balance of 18 percent of respondents reported that enquiries
from Mainland Chinese buyers declined across Hong Kong.
In addition to concerns over the effects of a US-China trade war and
already elevated home prices, higher interest rates are also expected to put
pressure on homebuyers. A net balance of 10 per cent of respondents reported
that it was tougher to access credit in August, and this is expected to
continue for the next three months as the US Federal Reserve continues to
increase interest rates.
Meanwhile rental rates are
still expected to increase over both the next three to twelve months, though at a much more
modest pace than previously expected.
"Chartered surveyors in Hong Kong indicated a fairly dramatic shift in
sentiment surrounding the housing market in Hong Kong in August," said the
report's author Sean Ellison, RICS Senior Economist for Asia-Pacific. "Given the broad-based nature of this
pullback, as well as the presence of several factors -- trade
wars, higher borrowing costs, dear valuations -- rather than a single catalyst, these
results may not point to a transitory phenomenon."
Home prices are expected to fall a nominal 0.2 per cent over the next 12
months across all of Hong Kong, though this figure disguises
some regional dispersion. Prices on Hong Kong Island are expected to fall 0.9
per cent over the next year, whilist
dropping 0.3 per cent in the New
Territories. Meanwhile, home prices in Kowloon are still expected to increase
0.5 per cent over the same period
RICS Hong Kong Residential Property Monitor is a monthly sentiment index tracking trends in the commercial property market. It
is a leading indicator for global investment and occupier markets. The full
report is available at www.rics.org/economics.
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