Hong Kong home rents inch up after declining for six-months

Average rents at major housing estates in Hong Kong showed a slight recovery after declining for six consecutive months, according to a private survey.

But analysts said it was too early for landlords to celebrate as the city’s outlook remains dim and the unemployment rate is expected to rise further.

Average monthly rents in 50 housing estates stood at HK$30.74 per square foot in March , compared with HK$30.64 in February.

‘This is the first rebound since the city experienced falling rents starting in September last year,” said Derek Chan, head of research at Ricacorp Properties.

The good news for landlords is that rental transactions also posted an increase, indicating that sentiment in the rental market has improved.

There were 1,301 leasing deals recorded in 50 housing estates last month, up from 1,119 deals in February.

The biggest rise was seen in Amoy Gardens in Kowloon Bay and Scenery Garden in Lam Tin

with a month-on-month rise of 4.7 per cent and 3.7 per cent, respectively .

In another survey, Centaline Property Agency said that average rents in 100 housing estates last month stood at HK$30.3 per square foot, representing a decline of 0.3 per cent compared with February’s month-on-month decline of 2.9 per cent.

The accumulative decline in the first quarter was 5 per cent, against a 6.2 per cent loss in the fourth quarter, according to Centaline.

Ricacorp’s Chan said demand for rental homes increased as home seekers delayed their buying plans in the wake of a housing market slump.

“Home rents will become stable in the short-term, but it is uncertain if they have hit their bottoms,” said Chan. It all depends on the economic outlook, he added.

Analysts said the city’s housing prices and rents will continue to face pressure amid the weakening economy.

According to the latest government statistics, unemployment rose by 0.1 of a percentage point to 3.4 per cent in the first quarter of this year. It came along with a 14 per cent year-on-year decline in the numbers of inbound tourists over the same period and a 12 per cent decline in total retail sales.

Financial Secretary John Tsang chun-wah said earlier that the slight rise in the city’s unemployment rate is “an important signal from the market”.

Property prices have fallen for five consecutive months since last October, with a cumulative drop of about 11 per cent up to the end of February 2016. Market data shows that the downward trend continued in March, according to Tsang.

The financial secretary said property prices are still out of tune with the economic situation and affordability. Overall property prices as of February this year have soared 58 per cent over their peak in 1997.