Home Realestate Hong Kong home prices plummet to five-year lows and could drop further

Hong Kong home prices plummet to five-year lows and could drop further

by Enochadmin

View of the Hong Kong skyline from Hong Kong Island.

Ingo Schulz | imageBROKER | Getty Photos

Costs of Hong Kong’s residential properties plunged to a close to five-year low as rising rates of interest and a mass exodus of expat staff drove down costs in one of many world’s most costly cities to work in.

And business insiders warn that the worst is but to return.

Hong Kong’s home price index for October fell 2.4% to 352.4 in comparison with the earlier month, marking the bottom stage for the gauge since November 2017.

In response to a Natixis report, the town’s property costs may plummet 25% from its earlier peak in late 2021 earlier than it begins to recuperate. 

The hunch is predicted to deepen by 12% in 2023, and subsequently by simply 2% in 2024, analysts led by Alicia Garcia Herrero stated.

Hong Kong, the world’s least affordable housing market, noticed dips in a few of its largest personal housing estates. In YOHO town, a 393-square ft condominium that is at present listed for five.98 million Hong Kong {dollars} that is about HK$15,216 per sq. foot, and a 20% drop in value in comparison with the earlier month.

A confluence of things together with weaker progress predictions and mainland Covid insurance policies contribute to the grim outlook, however Hong Kong’s immigration disaster and snowballing rates of interest stay salient sticking factors. 

Whereas there may be strain from the deteriorating fertility price and the quickly ageing inhabitants, the collapse of immigration and the heated emigration wave have added gasoline to the hearth.

Hong Kong recently hiked benchmark interest rates to 4.28%, pushing up borrowing prices to the very best since March 2008.

“The weak financial setting each in Hong Kong and globally, and quickly rising borrowing prices are an important contributors to the decline in property costs,” Nelson Wong, govt director of analysis at actual property firm Jones Lang LaSalle advised CNBC.

“The magnitude has been considerably deeper than anticipated primarily as a result of escalated geopolitical dangers [from the Ukraine war] and the sharp rate of interest hike trajectory,” Wong continued.

Inhabitants progress a key issue

Hong Kong’s rising inhabitants performs a decisive function in its residence demand.

“Whereas there may be strain from the deteriorating fertility price and the quickly ageing inhabitants, the collapse of immigration and the heated emigration wave have added gasoline to the hearth,” Natixis stated.

Hong Kong’s residents have left the city in droves since 2021, driven in part by strict Covid measures implemented in 2020 which was only recently relaxed in October. In his inaugural speech as chief executive of Hong Kong, John Lee pledged to draw talent from around the world.

Hong Kong chief executive John Lee during a press conference following his policy address session at Central Government Complex on October 19, 2022 in Hong Kong, China where he delivered his maiden policy address with measures to attract overseas talent and enterprises to the city by offering incentives. (Photo by Anthony Kwan/Getty Images)

Anthony Kwan | Getty Images News | Getty Images

What could stem the fall

While the property market downturn will likely extend, the pace of decline may slow in the next two years, according to Natixis.

The French investment bank said there will be limited declines in 2024 if there are no further economic and policy adjustment to shore up sentiment.

However, the analysts say that a lift in China’s Covid restrictions could restore investor confidence.

Further easing of stamp duties for non-permanent residents and for permanent residents intending to buy a second property could also help bolster the property market, they said.

— CNBC’s Monica Pitrelli contributed to this report.

Source link

Related Articles

Leave a Comment