Hong Kong home prices are back on the rise, stoked by dovish Fed
- Anecdotal evidence suggests local home prices are rebounding in the wake of the US Federal Reserve’s decision to freeze further rate hikes, pause balance sheet unwind
- Centaline Property Agency forecasts the secondary market will return to a record high in the next two months
Property watchers across Hong Kong are scrambling to keep pace with what appears to be a resurgent property market, as anecdotal evidence emerges that some sellers are raising prices after the US Federal Reserve signalled a dovish monetary policy stance for the foreseeable future earlier this week.
The sentiment shift follows the pivot by the Fed on Wednesday amid what it sees as slower US economic growth. In addition, Chief Executive Carrie Lam Cheng Yuet-ngor expressed concern that the firming up in the housing market since January could indicate that further price gains, and less affordability, are in store.
Eric Wong, director of Hong Kong-based Many Wells Property Agent, said potential homebuyers need to be prepared to increase their offer prices in the wake of the shifting market.
“The housing market has rebounded. There are quite a lot of cases in which homeowners do not offer discounts or even raise asking prices recently,” said Wong. “The general public is more optimistic. The capital accumulated in the market has fuelled purchasing power even more.”
Jack Wong, senior regional sales manager at Centaline Property Agency, said he received requests from 15 homeowners in Tin Shui Wai on Thursday seeking to raise asking prices or withdraw their properties from sale in anticipation of higher prices in the coming months.
The owners of a 1,100 sq ft flat in Locwood Court of Kingswood Villas in Tin Shui Wai, lifted their asking price to HK$13 million (US$1.66 million) on Thursday, up HK$2 million, or 18 per cent from its previous level.
In Tseung Kwan O, where more than 200 used homes have changed hands so far this month, the asking price of a flat of 677 sq ft at Le Prime of Lohas Park jumped 11.8 per cent to HK$9.5 million, up HK$1 million from its previous level, according to agency Hong Kong Property.
In Tin Hau, a 535 sq ft at Wing Hing Court sold for HK$10.7 million on Thursday, or 5 per cent higher than that of similar flats nearby, according to Centaline.
“Buyers are enthusiastic,” said Richard Lee, chief executive of agency Hong Kong Property.
Lee said he expected a good response on Saturday, when more than 900 new flats will be launched at various projects around the city.
“Some projects can be almost sold off,” said Lee. “There are already quite a lot of registrations of interest.”
Lee attributed the upbeat sentiment to the US Federal Reserve’s decision on Tuesday to keep interest rates on hold this year and to stop shrinking its balance sheet by the end of September on the back of slowing economic growth in China and Europe as well as an inflation rate that did not meet its mandate.
Home prices in the city dropped by 9.2 per cent between a peak in July, when a 28-month rally ended, and December last year, according to Hong Kong’s Rating and Valuation Department. They edged up 0.08 per cent in January.
Prices rose by another 2.1 per cent between February and March 10, according to the Centa-City Leading Index, which is compiled by Centaline. Investment banks Nomura and CLSA expect home prices to rise by 15 per cent this year, although a forecast by DBS sees prices dropping 10 per cent.
Chief Executive Carrie Lam Cheng Yuet-ngor expressed concern about housing affordability on Thursday.
Centaline said on Thursday the secondary housing market is likely to return to a record high by May.
