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The View | When will Hong Kong property prices recover? Not any time soon
- Weakness in the market is good news for buyers but bad for those in the city who own residential property and might want to sell
- Investors need to have confidence that the weakness of China’s stock market implies a phase of recovery, which in turn will benefit Hong Kong
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The extended weakness in Hong Kong’s residential property market has been an unusual and unpleasant experience for many of us. Property turnover fell 40 per cent last year with buyers waiting for price falls and sellers unwilling to sell at these prices.
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It doesn’t seem right for Hong Kong property to go sideways or downwards – even during the global financial crisis, property prices fell only 22 per cent. Prices rose more than fivefold from the dark days of the severe acute respiratory syndrome crisis in 2003, according to the Centa-City Index, but fell nearly 16 per cent last year.
We have had a “dead cat bounce” since then but, as the Post reports, owners are currently unable to sell unless they cut their price by more than 10 per cent. This is not good news for the more than 50 per cent of us who own a home. It is better news for beleaguered home-seekers, even if housing affordability in the city remains the worst of the major economies, according to EY.
Hong Kong is a property-obsessed city. This supports the big mortgage businesses and the fat-cat property developers that dominate the city’s economy and stock-market sectors – which are bedfellows, even if less volatile and sticky real estate prices lag behind share prices.
The Hang Seng Index peaked in January 2018 at 33,154 but now languishes some 40 per cent below that level. In a city founded on commerce, such pressure on both shares and property makes investment sentiment gloomy in a place aspiring to be happy.
10:08
Hong Kong has until 2049 to fix its housing crisis, but is it possible?
Hong Kong has until 2049 to fix its housing crisis, but is it possible?
Recent Chinese manufacturing data shows a contraction in activity, and the service sector is sluggish. Export declines reflect the general global slowdown and are not helped by the 6 per cent fall in the renminbi against the US dollar in the past year.
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