• Sun
  • Dec 21, 2014
  • Updated: 9:00pm
PropertyHong Kong & China

Buyers bide time before decline in home prices

PUBLISHED : Tuesday, 17 December, 2013, 3:22am
UPDATED : Tuesday, 17 December, 2013, 3:22am

Nearly six out of 10 people say they will not consider buying homes unless prices fall 20 per cent or more, as a rise in the supply of new flats could force developers to cut prices even more next year, says Midland Realty.

About 58 per cent of the respondents in a poll by the agency on next year's property sector outlook said they believed there was heavy downward pressure on home prices.

"The result indicates prices will be a key reason for any buying decision," Angela Wong Ching-yi, deputy chairman of the agency's locally listed owner, Midland Holdings, said yesterday.

Just 18 per cent said they believed prices had upside potential, while 48 per cent said they would sell their flats in anticipation of an imminent rise in interest rates, which could put their finances under pressure.

Wong said she expected home prices to decline 5 to 10 per cent next year as market sentiment had been severely damaged by the government's curbs. "Next year will be a bad year," she said.

Sales of older homes could fall to below 40,000 from this year's estimated 42,000 deals, Wong said, adding that that would be "the lowest in the past 19 years".

In contrast, she forecast developers would lure buyers to the primary market through discounts and low-price strategies next year. That would boost sales of new homes to 11,000 units from an estimated 9,000 this year.

Including flats, offices, shops, industrial units and car parks, Wong said property transactions next year would drop 7 per cent to 65,000.

Bearish sentiment prompted Midland Holdings to issue a profit warning on Friday, saying it expected to record a consolidated net loss for the second half of this year.


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This article is now closed to comments

I'd say that is a very "logical" way of thinking. But unfortunately (or fortunately, depending on what you want to happen), markets are not very logical. Assuming all buyers want to get a good deal on a flat, it is also very possible that when a 20% fall does occur, people will remain on the sidelines waiting for an even bigger drop. If this happens, prices may go even lower. After all, who wants a 20% discount when they can get 30%?
decline 5-10 %.... a bad year.... ? it's been a long time coming and well overdue, in fact we need a decline of more than 50% to have realistic home prices that ordinary people can afford.
There are many people sitting on the sidelines just itching to buy a property. They have their down-payment ready and have a perception when prices drop 20% they will jump in and purchase a property. Unless something like SARS or a Financial Crisis occurs this will not happen.
The reason it wont happen without a crisis is because people want to buy. They have the money to buy. They just want a good deal. Some people will see 20% as a good deal, others 10 % and others 5%.
Also people selling are not willing to loose 20% and they have no rush to do so. They may be willing to loose 5% to get the cash to move to a larger place.
There will be enough sellers are the 5% drop place to buy / sell that unless there is a major issue it wont drop below that.


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