Property transactions in Hong Kong in the first five months of the year rose to the highest level since 1997, with buyers splashing out HK$343.7 billion (US$43.8 billion) on homes, car parks, shops and industrial and office units, data from the Land Registry showed on Tuesday. But Ricacorp Properties believes an escalation in the US-China trade war, which saw US President Donald Trump raise tariffs on US$200 billion worth of Chinese goods from 10 per cent to 25 per cent on May 10 and tit-for-tat Chinese tariffs on US$60 billion of US goods from June 1, could put the brakes on buying, resulting in up to 40 per cent fewer deals this month compared to last month. “The sharp increase in transaction value was mainly due to the strong sales of new flats,” said Buggle Lau, chief analyst at Midland Realty. Homebuyers spent about HK$121.8 billion on new flats in the first five months, up 47.6 per cent from the same period in 2018. Hong Kong’s home prices gather speed in April, rising at the fastest pace in more than six years Joseph Tsang, managing director and head of capital markets at JLL Hong Kong, said the performance was unlikely to be repeated in the second half as the impact of the US-China trade war will result in fewer transactions from this month onwards as the dispute will have an adverse impact on Hong Kong’s economy and affect buyers’ confidence. “Manufacturers will cut their operation or lay-off workers once they see a contraction in orders on hand from the US. It will have profound impact to economy,” he said. Vincent Cheung, managing director of Vincorn Consulting and Appraisal, said that if the trade war persists then Beijing administration will tighten capital outflow. “This will discourage mainlanders to buy property or even travel to Hong Kong. The impact cannot be underestimated,” he said. In May, 10,353 property transactions were concluded, bringing the total number of deals to 37,280 for the first five months, Land Registry data showed. Worsening US-China trade war hits Hong Kong’s office rental market as companies put expansion plans on hold The impact of the trade war was starting to be felt in May itself. The number of office deals dropped 32 per cent to 15 last month compared to April at 50 major grade A office buildings tracked by Midland IC & C. Six of the 15 deals, which took place at The Center in Central, were concluded before the trade tensions spiked, said Midland. The souring market sentiment also hurt the office leasing market. “Leasing momentum has slowed down in recent months,” said Marcos Chan, head of research for Greater Bay Area and Hong Kong at CBRE. Most of the industries will be impacted to different extents should the trade conflict persist and escalate, he said. “The industries that will feel the direct impact will be trade and logistics, manufacturing as well as sourcing,” Chan said, adding that it could trickle down to banking and finance sector should the credit situation worsen.