Hong Kong home sales expected to fall amid stock market crash

Home sales could drop up to 20 per cent and prices dip following the stock market turmoil but supply shortage and strong economic fundamentals will continue to support Hong Kong's property market, say analysts.

"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," said Charles Chan, property consultancy Savills' managing director for valuation and professional services.

"But if the situation persists and there's no significant rebound of the stock market, property prices will drop eventually."

In the short term, transaction volumes could shrink significantly but Chan said owners would not be willing to cut prices as holding power was still strong.

Buying sentiment is bound to be affected as the market is expected to remain weak in the next few months, said Sammy Po Siu-ming, chief executive of Midland Realty's residential department.

Po said he expected transactions for second-hand flats to fall 10 per cent to 20 per cent to about 3,000, back to this year's lowest level in March following the Hong Kong government's last round of cooling measures.

Sales volume in luxury homes - valued at HK$10 million or above - will drop by up to 20 per cent month on month, according to Po. He said, before the crash, he had expected luxury home prices to rise up to 15 per cent this year on the back of the wealth effect created by the stock market boom. "Without this factor, luxury home prices will go up only modestly," he said.