(PHOTO PROVIDED TO CHINA DAILY)
Hong Kong’s hardy housing market has continued to stun the world, though not as baffling to local pundits who have long had their finger on the pulse of one of the most expensive cities on the planet.
If the latest comings and goings in the market are anything to go by, it seems all the traumatic negatives — a year of unprecedented street protests, the current economic recession that has dwarfed some of the worst financial crises the city had seen in decades, and the coronavirus shock — have been swept under the carpet.
Hong Kong’s indomitable “can-do, most livable” spirit has again proved itself. Property speculation, with which Hong Kong is infamously associated, has been rendered virtually non-existent as home prices defied the cue from the financial routs of 1997, 2003 and 2008 that drove the housing sector to decade lows and sparked sell-offs in financial markets.
The transaction rebound in both the primary and secondary markets pointed to the strong purchasing backlog cooped up after stifled sentiment since June last year when the unrest started
Alva To Yu-hung, Cushman & Wakefield’s Greater China vice-president and head of consulting
Both the primary and secondary markets recorded higher prices and trading volumes in the first half of this year. Industry players believe it reflects strong demand among first-time buyers, the solid holding power of sellers, and low interest rates under the quantitative easing policy of the United States.
In the first quarter of this year, Hong Kong’s GDP shrank 8.9 percent year-on-year — the steepest for a single quarter on record. The jobless rate for the February-to-April period hit 5.2 percent — rising for the seventh straight month to its highest in more than a decade. Under the context, the Hang Seng Index has slumped by up to 7,000 points last year.
But, at the same time, 5984 apartments were sold in the primary and secondary markets in May — a 46 percent rise compared to April and the highest in the past year.
Meanwhile, home prices in the secondary market picked up 3 percent in late May, compared to April, according to the Centa-City Leading Index released by Centaline Property.
Alva To Yu-hung, Cushman & Wakefield’s Greater China vice-president and head of consulting, said the transaction rebound in both the primary and secondary markets pointed to the strong purchasing backlog cooped up after stifled sentiment since June last year when the unrest started.
With COVID-19 relatively contained in Hong Kong, in the primary market, property developers were jubilant with the response to several new residential projects put on the market in May with special discounts and incentives, after four months in the doldrums.
Leading developer Sun Hung Kai Properties saw as many as 25 buyers registering for each of the 487 flats at its Wetland Seasons Park project in Tin Shui Wai in the northwestern New Territories.
Vanke — one of the Chinese mainland’s biggest developers — rolled out The Campton residential complex in Cheung Sha Wan, northwestern Kowloon, in May with an average price of HK$16,411 (US$2,118) per square foot — the lowest in four years. The feedback was equally astounding.
However, with possible sanctions of the United States against the SAR, To said a wait-and-see mentality has prevailed in the market although a major sell-off or turbulence is unlikely.
After all, reaction to the threat of US sanctions just started to brew since late May, and the market still needs to see concrete progress before making any decisions, he said.
To sees a 15 percent slide in housing prices through 2020. The COVID-19 crisis, social unrest and the escalation in Sino-US frictions may create further volatility in the market, he said.
But, in his view, it would take time for the market to react to any economic contraction and begin to slow down, while any sudden jerk in home prices, such as a 20 to 30 percent drop, is unlikely.
Overall, market fundamentals remain sound, and sellers still possess the financial capacity to stick to asking prices and wait for suitable buyers to show up.
Leung Chak-chau, a senior account manager with Festival Home Property Agency, said the city saw a powerful burst of buying power in May.
With COVID-19 easing off in Hong Kong, many developers were hesitant to miss the boat, rolling out new residential units in May. Leung noted that his monthly commissions had doubled in May from previous months, surging from HK$100,000 to HK$200,000.
He recalled that in February and March, the coronavirus horror had deterred many people from going out for anything and, for weeks, he couldn’t take clients out to view apartments, let alone clinching a deal.
Under the SAR government’s new policy that purchasers of properties worth less than HK$8 million are eligible for mortgage loans of up to 90 percent, Leung said smaller flats of less than 500 sq ft, and costing below HK$8 million, are the pick of the bunch.
There’re also investors diverting their money to a safer haven in the property sector amid the gyrations in global stock markets, said Leung.
With more than a decade as a property agent under his belt, he believes that although uncertainties are piling up, Hong Kong’s housing market won’t be in for any dramatic descent in the near future.
In the world’s least affordable housing market, only 49.8 percent of the population owns a home. The rigid demand for private housing is unwavering despite the recession, said Leung.
Moreover, he reckons if the upcoming national security law for Hong Kong could effectively put the lid on the months of social unrest, investors will be here to stay.
The property market had gone through a lot of turbulence in the past year, exacerbated by the COVID-19 outbreak. Hong Kong people now have the capacity to digest all the negative factors, free from panic sell-offs, he said.
Leung himself is a potential first-time homebuyer, with an eye on a new residential project at Tai Wai in the southeastern New Territories, which is due to come on stream soon. He plans to buy a 400 to 500 sq ft apartment costing less than HK$7 million.
The economic downturn and political wrestling, he says, are not on his mind, and he’s betting big on Hong Kong’s future.
