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Hong Kong home builders such as CK Asset Holdings have hinted they will cut prices of new homes should the general market trend lower. Newly constructed residential buildings taking shape in the Kowloon district of Hong Kong. Photo: AFP

Brace for up to 20 per cent decline in Hong Kong home prices, CK Asset senior director says

  • Home prices could drop by up to 20 per cent in the next 22 months, as outlook darkens, says CK Asset executive director Justin Chiu
  • Expect builders to slash new home prices along with the sliding market, he says

Hong Kong home prices could be headed for a multi-year downtrend that knocks valuations by up to 20 per cent, prompting major developers to slash prices for new homes along with the sliding market, according to a senior executive at CK Asset Holdings, the second largest developer in Hong Kong by capitalisation.

CK Asset executive director Justin Chiu Kwok-hung said on Tuesday that home prices could drop 10 per cent this year and by up to 8 to 10 per cent next year, amid simmering trade tensions between China and the US that show little sign of being resolved in the near future.

“We will adjust our selling prices if the property market is heading to a downtrend. But our projects would still have to make a profit as the sites were bought at lower cost years ago,” Chiu said. “Home prices will need to return to the level of end 2016 and early 2017 before the general public can afford to own a home.”

Hong Kong home prices dropped about 9 per cent from the peak in July last year to December, according to data released by the Rating and Valuation Department. For the whole of 2018, home prices grew 1.6 per cent, though the increase was the smallest annual growth in 10 years.

CK Asset executive director Justin Chiu believes local home prices could be entering a multi-year downtrend. Photo: Nora Tam

Donald Cheung, executive director of property developer Emperor International, said he expected home prices to drop a further 10 to 15 per cent.

“Whether it will rise again can only be determined in the third quarter because of uncertainties currently in the market,” he said.

Cheung said low interest rates and a modest supply pipeline in the long term meant that housing prices were unlikely to be shaken too drastically.

The bearish outlooks contrasted with rosier views by CLSA, Citibank and JPMorgan, which predicted home prices will rise by up to 15 per cent between April and December, driven by robust liquidity and pent up demand.

Meanwhile, home builders such as Henderson Land Development, New World Development, Sino Land and Chinachem Group, had a relatively benign view of the market, saying home prices could remain stable or even rise slightly this year.

CK Asset has raised the number of homes it will offer for sale to 2,400 this year, up 4.4 times from the 443 units it sold in Hong Kong in 2018.

CK Asset said its revenue from 2018 home sales in the city amounted to HK$15 billion (US$1.91 billion), a drop of 70.4 per cent from HK$50.6 billion in 2017.

The developer plans to offer a combined 4,600 homes for sale this year in Hong Kong and the mainland, slightly below the 5,000 units offered in 2017.