Hong Kong becomes a tenant’s market as coronavirus puts home rentals on slippery slope
- Coronavirus outbreak has made things worse for home leasing market after a five-month slide, according to property agents
- Selective transaction records this month indicate more than a 10 per cent slide in rentals from the start of the year
Hong Kong’s biggest health crisis in decades is pushing the city’s home rentals further down a slippery slope, making it firmly a tenant’s market since prices began retreating from an all-time high in August amid social unrest.
The latest transaction records in early February for some housing estates such as Sha Tin, Hung Hom, Whampoa Garden and Tseung Kwan O indicate prices have softened by more than 10 per cent from the start of the year, analysts said. Without any mitigating force, they could drop by 10 to 15 per cent by year end.
The coronavirus outbreak that originated from Wuhan in mainland China’s Hubei province has so far prompted retailers like J. Crew and Sa Sa International to shut some stores to save costs after enduring months of street protests and a technical recession in 2019. The city’s biggest property agencies are also seeking rent relief, as no one dares to come out to visit sales offices.
“Tenants now have a greater say on prices in the home leasing market than they used to,” said Sammy Po Siu-ming, chief executive of the residential division at Midland Realty. This will persist “if the outbreak continues and the economy does not get any better”.
Hong Kong has 42 confirmed cases of coronavirus infection as of Tuesday, including a family of nine who contracted them over a hotpot dinner in a restaurant in Kwun Tong on January 26, health officials said. One death has been reported.
The health emergency is straining a government that has lost a lot of good will with the population after sustained social unrest in 2019. It is also watching over an economy that is forecast to contract again this year, after shrinking last year for the first time since the global financial crisis.
Rentals fell by 1.9 per cent on average to HK$35.38 per square foot in December from a month earlier, according to Ricacorp. They have declined 5.1 per cent since the market peaked in August, according to an index compiled by the city’s Rating and Valuation Department.