Hong Kong housing market regains confidence but long term outlook remains cloudy
Hong Kong’s housing market took a breather last week as home buying confidence was restored after the US deferred an interest rate hike, but industry experts believe the rebound could be short-lived based on market prospect in the coming months.
With the improvement in market sentiment, Sun Hung Kai Properties’ Park Yoho Venezia in Yuen Long has attracted close to 2,100 potential buyers since it opened for registration last Friday.
Three apartments at blue-chip housing estate Taikoo Shing in Quarry Bay were sold over the weekend, compared to two on the previous weekend. It raised the total number of transactions at the estate to 13 so far this month, up from 8 deals in May.
“We have seen more bookings for viewing flats in the secondary market over the weekend,” said Centaline Property Agency’s residential department managing director Louis Chan Wing-kit.
“Home seekers have quickened their purchase decisions after no rate hike in US last week,” he said.
On June 15, the US Federal Open Market Committee (FOMC) said it would hold interest rates steady this month, and issued a dovish statement along with a projected timetable for further rises.
The FOMC indicated it still expected two rate rises this year, but Fed chairwoman Janet Yellen said after the decision that “we are quite uncertain about where rates are heading in the longer term”.
Sammy Po Sui-ming, chief executive at Midland Realty’s residential department, said asking prices in the secondary market have been firmer after most homes offered at bargain prices had been sold.
“The pace of price falls in the secondary market has slowed,” he said.
But prospects for a further downward adjustment on second -hand home prices have not been totally removed as the economic outlook in the second half of the year remains bleak, coupled with the potential for interest rate hikes in the US later in the year.
Po expects home prices would fall about 5 per cent in the second half.
Henry Choi, managing director of Century 21 Surveyor, said the firm has 50 new foreclosed properties to offer for auction so far this month.
“Although this month still has more than a week to go, the number of defaulted cases put on sale is already the highest within a month in the past two years,” he said.
During the week to Sunday June 19, 109 units were sold at 50 estates tracked by Ricacorp Properties, 5 per cent less than the previous week.
“It was the smallest fall since the end of February and the number of transactions managed to stay above the 100 level for the four consecutive months,” said David Chan, a director at Ricacorp.
He said any room for negotiation has been narrowed after units released at steep discounts were snapped up by bargain hunters.
“Developers’ flexible financing schemes are also luring potential home buyers away from the primary market. That’s made sales in the secondary residential market become slower,” he said.