Tuesday, October 16 2018

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Hong Kong Home Prices Set to Drop for The First Time in Two Years, Says RICS Report

Update: September, 24/2018 - 03:52

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 the field.

 

Respondents to the most recent survey reported a "considerable" slowdown in property inflation in August. The 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

 

The 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.


About RICS

Confidence through Professional Standards

 

RICS promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure. Our name promises the consistent delivery of standards -- bringing confidence to the markets we serve.

 

We accredit 125,000 professionals and any individual or firm registered with RICS is subject to our quality assurance. Their expertise covers property, asset valuation, real estate management; the development of infrastructure; and the management of natural resources, such as mining, farms and woodland. From environmental assessments and building controls to negotiating land rights in an emerging economy; if our members are involved the same professional standards and ethics apply.

 

We believe that standards underpin effective markets. With up to seventy per cent of the world's wealth bound up in land and real estate, our sector is vital to economic development, helping to support stable, sustainable investment and growth around the globe.

 

With offices covering the major political and financial centres of the world, our market presence means we are ideally placed to influence policy and embed professional standards. We work at a cross-governmental level, delivering international standards that will support a safe and vibrant marketplace in land, real estate, construction and infrastructure, for the benefit of all.

 

We are proud of our reputation and work hard to protect it, so clients who work with an RICS professional can have confidence in the quality and ethics of the services they receive.



RICS

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