The stock market crisis could see home sales in Hong Kong decline by as much as 20 percent with home prices also likely fall. Despite this, a shortage in supply and strong economic fundamentals will continue to support Hong Kong’s property market, analysts told the South China Morning Post.
“It all depends on whether the plunge in share prices is recovered in the coming days. If it’s only a momentary dip, the impact on property prices will be minimal,” Charles Chan, Savills’ managing director for valuation and professional services, said. “But if the situation persists and there’s no significant rebound of the stock market, property prices will drop eventually.”
According to Chan, owners would not be willing to cut asking prices as holding power was still strong. This is likely to lead to transaction volumes shrinking significantly in the short term.
The market is expected to remain weak in the next few months and that will affect buying sentiment in Hong Kong, Sammy Po Siu-ming, chief executive of Midland Realty’s residential department, noted. Po also told the newspaper that he expected transactions for second-hand condominiums and apartments to fall 10 to 20 percent. That would be lowest level in 2015 since March when the Hong Kong government introduced another round of cooling measures.
Sales volume in luxury homes could decrease by 20 percent month-on-month, according to Po. Before the crash, he estimated that luxury home prices would increase by 15 percent this year due to the wealth effect created by the stock market boom. “Without this factor, luxury home prices will go up only modestly,” he stated.
Some homeowners are now willing to cut asking bids by two to three percent after the latest volatility in the stock market, he added. It was not all bad news according to analysts who spoke with the South China Morning Post.
Nicole Wong, a regional property research head at CLSA, was optimistic that the stock market turmoil could be a blessing in disguise. “There are no major changes in Hong Kong’s fundamentals such as low interest rate and limited supply,” Wong said. She also mentioned the fact that the troubles might prompt some to invest in property.
