Trade tensions and rising interest rates put the brakes on sprialling property prices
HONG KONG, CHINA - MediaOutReach - 24 September 2018 - Housing prices across Hong Kong are expected tofall 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 interestrate hikes and concerns over already elevated property prices are now expectedto stifle growth, as respondentsreported the first dip in buyer demand in two years.
Published monthly by RICS (RoyalInstitute of Chartered Surveyors), the Hong Kong Residential Market Surveyprovides valuable insights into professional sentiment in the city'sresidential sales and letting markets, by aggregating the reports of experts inthe field.
Respondents to the most recent survey reported a "considerable" slowdown in property inflation inAugust. Thedata 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 enquiriesfrom new buyers. A balance of 18 percent of respondents reported that enquiriesfrom Mainland Chinese buyers declined across Hong Kong.
In addition to concerns over the effects of a US-China trade war andalready elevated home prices, higher interest rates are also expected to putpressure on homebuyers. A net balance of 10 per cent of respondents reportedthat it was tougher to access credit in August, and this is expected tocontinue for the next three months as the US Federal Reserve continues toincrease interest rates.
Meanwhile rental rates arestill expected to increase over both the next three to twelve months, though at a much moremodest pace than previously expected.
"Chartered surveyors in Hong Kong indicated a fairly dramatic shift insentiment surrounding the housing market in Hong Kong in August," said thereport's author Sean Ellison, RICS Senior Economist for Asia-Pacific. "Given the broad-based nature of thispullback, as well as the presence of several factors -- tradewars, higher borrowing costs, dear valuations -- rather than a single catalyst, theseresults may not point to a transitory phenomenon."
Home prices are expected to fall a nominal 0.2 per cent over the next 12months across all of Hong Kong, though this figure disguisessome regional dispersion. Prices on Hong Kong Island are expected to fall 0.9per cent over the next year, whilistdropping 0.3 per cent in the NewTerritories. Meanwhile, home prices in Kowloon are still expected to increase0.5 per cent over the same period
TheRICS Hong Kong Residential Property Monitor is a monthly sentiment index tracking trends in the commercial property market. Itis a leading indicator for global investment and occupier markets. The fullreport is available at www.rics.org/economics.
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