Hong Kong property

Moody’s sees Hong Kong home prices tumbling … half of Hongkongers agree

  • House prices and sales of new homes will drop by up to 15 per cent in the next 12 to 18 months, according to Moody’s Investors Service

  • Almost half of Hongkongers expect home prices to fall in the next year, estimating a 12 per cent drop, according to a Nielsen survey

PUBLISHED : Thursday, 22 November, 2018, 8:05am
UPDATED : Thursday, 22 November, 2018, 9:47am

Moody’s Investors Service added itself to the chorus of voices predicting a dramatic fall in Hong Kong’s property prices on Wednesday, as a separate survey showed almost half of Hongkongers agree.

Home prices and sales of new homes will drop by up to 15 per cent in the next 12 to 18 months, taking them back to the level they were at in the fourth quarter of last year, according to the credit ratings agency.

“Emerging cases of price cuts from the secondary market of 15 to 20 per cent could eventually inspire similar discounts in the primary market,” said Stephanie Lau, vice-president and senior analyst at Moody’s Investors Service, at a media briefing on Wednesday.

Potential homebuyers are becoming more cautious amid rising mortgage rates, a slump in the stock market, and uncertainty caused by the US-China trade war, she said.

Meanwhile, a Nielsen survey found 47 per cent of Hongkongers see home prices falling by an average of 12 per cent in the next year.

The digital survey of 1,002 Hongkongers aged 18 to 65, conducted in October, was commissioned by REA Group, a global online real estate company.

“The biggest concern is the US-China trade war and the impact that will have on economic growth,” said Nerida Conisbee, chief economist at REA Group at a media briefing on Wednesday. “Rising mortgage rates, stock market jitters and potential oversupply are also concerns.”

The gloomy forecasts come amid increasing signs that Hong Kong’s famously expensive property market has finally taken a downturn.

Centaline Property Agency’s index of home prices has declined for the last seven weeks by a total of 3.32 per cent, and is now at the level last seen in May. It fell 1.28 per cent the week ending November 11, the biggest weekly drop since the week ending March 13, 2016.

Notably, appetite for “micro flats” – units measuring less than 200 square feet – has slumped by 28 percentage points to a record low of 13 per cent in the Nielsen survey, which has run 14 times since 2012.

One of the main reasons was the launch of the government’s Home Ownership Scheme, which offers subsidised flats at up to 48 per cent below market rate, according to Kerry Wong, chief executive officer Greater China at REA.

Record number of applicants scramble for affordable Hong Kong flats in Home Ownership Scheme sale

“We found that 39 per cent of respondents would purchase property via this scheme and would not consider buying a private home. Given that people can afford a bigger flat for the same price as a micro flat, demand for this has dramatically decreased.”

The survey found that about three in every four Hongkongers (73 per cent) believe young people wishing to buy property would require help from the “bank of mum and dad”. On average they believed parents would need to contribute HK$1.41 million to make their children’s home-ownership dreams come true.

For those who won’t receive parental help with the costs, there seems little hope; about a quarter of respondents said they would never be able to afford a property.