Confidence in Hong Kong’s property market weakened further in the fourth quarter, despite a spike in sales in November driven by price cuts and aggressive marketing, according to a survey by Citi Hong Kong.
The investment bank’s survey found that 57 per cent of respondents were “very uninterested” in buying a property now, up from 49 per cent during the same period last year, and six percentage points higher than in the previous quarter. Almost half of the respondents, 46 per cent, believe prices will decline in the next 12 months.
“Due to the current social instability [in Hong Kong] and the ongoing trade war between China and the US, prospective buyers are more cautious and reluctant to enter the market. Some are even concerned about the economic prospects of Hong Kong, fearing that rising unemployment will hamper the decision to enter the market,” said Derek Chan, head of research of Ricacorp Properties.
Sales of homes in Hong Kong shot up to a six-month high in November. Overall residential transactions surged 43.9 per cent month on month to 5,756, while their value jumped 17.4 per cent to HK$47.78 billion (US$6.1 billion), according to figures from the Land Registry. It was the second consecutive month of rising deals.
The data showed that 3,339 lived-in homes were sold in November, a rise of 39 per cent from October, after the government’s announcement that it would relax mortgage lending conditions for flats costing HK$8 million to HK$10 million. That was also a six-month high.
Richard Lee, chief executive of Hong Kong Properties, said an average drop in home prices of between 2 and 3 per cent in November had bolstered demand.
Chan said the imminent introduction of a vacancy tax had encouraged developers to reduce their prices and to market their projects aggressively in an attempt to shift unsold units.
Market observers said that because of the time lag between buying and registering a property with the government, which is typically about four weeks, the November transaction figures more accurately reflected the state of the market in October.
Hong Kong’s notoriously expensive property market has been battered by six months of civil unrest that have pushed the city into a technical recession.
Chan said last week he expects transactions in December to sink more than 40 per cent month on month to just 3,850, the lowest this year, as sentiment had been dampened by heightened protest violence in the first two weeks of November.
Last week, Knight Frank predicted home prices would drop by 5 per cent next year.
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