Analysts change their tune, forecast an up to 15 per cent increase in Hong Kong home prices this year
- Record high deposits in Hong Kong banks as well as demand from new residents will drive rebound, says CLSA
- Home prices to rise by 10 per cent this year, says Citibank
If you have been holding out for a steeper drop in the prices of residential property in Hong Kong, you are in for a disappointment. Analysts – even those previously forecasting declines – are increasingly of the opinion that prices will bottom out by March. And then rise by up to 15 per cent by December this year.
Nicole Wong, regional head of property research at securities company CLSA, said the sheer amount of money deposited in Hong Kong banks as well as demand from new residents who no longer need to pay the buyer’s stamp duty, will drive the rebound.
Three makes a trend, as CLSA becomes third bank to forecast Hong Kong’s home prices to drop
“Last year’s correction was because of a slide in the stock market and the value of the yuan. But these factors have now stabilised,” she said. The company correctly predicted the correction last year – the Centa-City Leading Index dropped by more than 9.8 per cent from a peak in August 2018.
The low possibility of an interest-rate increase means Hongkongers will turn to property investment, said Wong. “Hong Kong’s total deposits are at record highs. With so much money, and with interest rates possibly not rising by the end of the year, returns will not be high. [Cash holders] will look for a way out,” she said.
Hong Kong’s bank deposits stood at HK$4.99 trillion (US$640 billion) by November 2018, according to the Hong Kong Monetary Authority. Wong said the total savings were 59 times the market value of new apartments sold last year.