Rebound in Hong Kong’s home prices unlikely to come this year: analysts
Analysts say a supply overhang in the city’s residential real estate market is likely to loom this year and next
As of Friday, about 9,150 first-hand transactions had been recorded so far this year, a 3.9 per cent increase from a year earlier and a six-year high since 11,580 transactions were recorded in the first half of 2019, according to agents.
Growth for lived-in homes was more muted. An index measuring secondary home prices inched up 0.03 per cent in May from a month earlier after rising slightly in April, according to the Rating and Valuation Department. In the first five months of the year, second-hand home prices declined 0.9 per cent.
Meanwhile, rents in the city climbed 0.67 per cent in May from a month earlier, the sixth consecutive month of increases.
As rents rise and home prices drop, rental yields on the city’s residential properties have been increasing, said Edward Chan, director at S&P Global Ratings.
“We estimate the average gross rental yield for Hong Kong’s private homes to be about 3.5 per cent,” he said. “Based on a mortgage rate of about 2.3 per cent, a [Hong Kong interbank offered rate (Hibor)] of less than 1 per cent plus a margin of about 1.3 per cent, there will be a positive carry.”