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Hong Kong property
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Victoria Allan
Victoria Allan

Concrete Analysis | Year of the Ox is already looking like a step up for Hong Kong property market from the one just passed

  • Hong Kong’s economy and property market will firmly be on a slow, steady road to recovery by spring
  • There will be a great deal of wait-and-see in the first quarter, but it will not linger for long as things look up with vaccination plan in progress

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The new year will bring an improvement to the tragic local property scene, like one here in along a row of shop houses in Tsim Sha Tsui in December 2020. Photo: K.Y. Cheng
Victoria Allan

There will not be an overnight transformation but 2021 – The Year of the Ox – is already looking like a step up from the one just passed.

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It is safe to say that most of us will be thrilled to see 2020 out the door. After a year that went from bad to worse and back again, most of us are hoping the next 12 months are better. And they will be. Hong Kong’s economy in general, and the property market in particular, are not heading for a miraculous rebound, but both will firmly be on a slow, steady road to recovery by spring.
So where are we coming from? Despite the pandemic, the past year in property was marked by ongoing end-user demand impacted by low supply (the government’s target of 20,850 units for 2020 totalled just 13,700 completed by October), and policy tweaks that relaxed lending rules and stamp duties on commercial property. Low interest rates and high market liquidity have kept the market stable, and despite an April trough, when all is said and done, prices fell off just 1 per cent in the mass market and 8 per cent on average in some sections of the high-end market for the year.

Looking ahead, some analysts believe upgrader demand makes the market look stronger than it actually is, and predict mass prices are going to fall another 5 per cent next year – as much as 10 per cent at the luxury end. These perspectives undervalue Hong Kong’s solid fundamentals, which are not going anywhere. There will be a great deal of wait-and-see in the first quarter, but it will not linger for long.

Nonetheless, there are key factors that will impact residential markets in 2021 – Covid-19’s status, the local economy and property supply, a low interest rate environment, and international and local policy.

05:09

What there is to know about the Covid-19 vaccines roll out in Hong Kong

What there is to know about the Covid-19 vaccines roll out in Hong Kong

The coronavirus fight is, of course, first and foremost on everyone’s mind, the single biggest influence on every element of our lives right now. With vaccination programmes already under way in the United Kingdom and the United States, and set for the Hong Kong special administrative region in February, the world released the collective breath it was holding. It is still going to be a while before any of us jet off on holiday, and flash outbreaks will continue, but in a sentiment-driven market like Hong Kong’s, it is the kind of news that has a positive effect.

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