Is the correction in Hong Kong's home prices over? More than half of market observers think so

By Pearl Liu and Lam Ka-sing; / | April 1, 2019 6:37 PM SGT
Thirteen out of the 23 respondents including developers, lawyers, economists and veteran investors interviewed between March 22 and 25, said they expect prices of new homes to rise by up to 15 per cent on the back of pent-up demand. The rest however expect prices to fall further by as much as 5 per cent because of the uncertain global economic outlook.
The survey results show why Hong Kong's Chief Executive Carrie Lam Cheng Yuet-ngor felt compelled to warn about the spectre of rising home prices last week, as affordability was one of the priorities of her administration.
Hong Kong's home prices rose in January, after a 28-month bull month stumbled last August. Since then, property analysts have been divided as to the direction of the prices. DBS said prices will fall by 10 per cent, while Citibank said prices will rise by 10 per cent.
"Unless we have another economic shock, prices are going to go up by 15 per cent before the end of this year," said Nicole Wang, regional head of property research at CLSA.
Meanwhile, the familiar sight of prospective buyers queuing up at new home sales centres has returned. On March 23, buyers snapped up 82 per cent of 607 units that went on sale in four different projects in the biggest weekend launch of the year.
"They have been waiting for a very long time, and cannot wait any longer," said Binoche Chan, chief operating officer of List Sotheby's International Realty, adding that the demand had never disappeared and the room for negotiation offered by homeowners has been narrowing.
Figures from Colliers show that property transactions are on the rise, doubling to 4,300 in the first two months of the year compared to the last two months of 2018 when prices were falling.
Prospective buyers wait at Henderson Land Development's sales centre at Mira Place in Tsim Sha Tsui for a chance to buy one of 246 flats on offer at The Vantage, on March 9. Photo: Edmond So