Hong Kong house price correction nearing its end

26 February 2019

Prominent real estate advisor Savills pointed out that despite the full year decline of 2% in luxury residential transaction volumes on Hong Kong Island, a few new launches succeeded in attracting market attention; while Kowloon / New Territories were actually boosted by consistent primary sales, recording a 39% increase in volumes over 2018 as a whole.

Looking forward, the US/China trade issues seem to be progressing well, which may lead to an ultimate resolution soon. Coupled with a stable local economic outlook for Hong Kong (2.5% per annum growth from 2019 to 2023) and a possible turnaround in the stock market, we expect that the current house price correction may be nearing its end, with any possible declines to be frontloaded in the first two quarters of the year.

Mr. Simon Smith, Senior Director, Research & Consultancy commented: “With the US signaling a slowing in the rate of interest rate hikes coupled with the fact that a resolution of the US/China trade war may be reached and future supply is peaking, the current residential price adjustment may come to an end sooner than expected.”

Mr. Keith Chang, Managing Director, ‎Savills Realty Limited said: “On the back of vigorous land sales and the government’s acceleration up of land supply over the past few years, future four-year housing supply is due to reach a 10-year high (24,000 units per annum, nearly double the average completion figure of 13,000 units per annum.”

Ms. Edina Wong, Senior Director, Residential Services said: “As most buyers turned cautious in the luxury market, the transaction volumes shrank a bit in late 2018. Nevertheless, some new projects in Ho Man Tin (Ultima, One Homantin), Shatin (La Cresta, La Vetta) and Tai Po (The Horizon) caused a rebound in luxury sales volumes in Kowloon / New Territories proved the market still has upward potential.”

Mr. Patrick Chau, Senior Director, Residential Development & Investment added: “The growth of the local deposit base (+25% from 2015 to 2018) means local banks are well equipped with liquidity to maintain interest rates at current levels while offering competitive rates for mortgages.”

 
 

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