Hong Kong property prices expected to slide further as fears of protests remain despite pan-democrats’ thumping election win

Lam Ka-sing

Market observers are cautious on the property market outlook despite a rousing win for pan-democrats and a surge in developers’ share prices, as they fear there could be more anti-government protests ahead, while the number of people selling flats in Hong Kong to acquire foreign citizenship continues to rise.

“I think the protests will actually continue. The lack of protests was because people wanted the election to go smoothly,” said Raymond Cheng, head of Hong Kong and China research at CGS-CIMB Securities. “But people are waiting to see how the government responds to the five demands. If the government does not have a meaningful response, the protests will start again.”

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He said he was not optimistic that the election results could help in the recovery of the property market.

The five core demands of the protesters include full amnesty for arrested demonstrators and the setting up of an independent inquiry into alleged police brutality.

Officials open a ballot box at a polling station in Kowloon Tong, Hong Kong, on November 24, 2019. Photo: Reuters

Cheng’s sentiment is shared by other analysts.

“About 20 per cent of owners in my area have [slashed prices by] 10 to 20 per cent, and about 10 to 15 per cent” have offered to sell their homes because they want to emigrate, said Gary Lam, district sales director for North Point at Centaline Property Agency.

Lam said on Friday a 792 square feet flat at City Garden in North Point sold for HK$12.28 million (US$1.57 million), noting that it was 5.5 per cent lower than the banks’ valuation of about HK$13 million.

“The owner wants to emigrate so he decided to slash the price to attract buyers,” he said.

Kwai Fong district has also seen four cases of owners selling their flats to fund their emigration plans in the first two weeks of this month alone, said Frankie Hui, another district sales manager at Centaline.

“Quite a number of homeowners seized the opportunity to offload stock as transactions surged after mortgage requirements were relaxed,” Hui said.

The developments come even as more than 53 per cent of Hongkongers expect home prices to drop, with 17 per cent expecting it to plummet more than 40 per cent, according to phone interviews conducted by the University of Hong Kong with 511 respondents in mid-November. The previous survey in April found only 8 per cent were expecting prices to trend lower.

Raymond Chong, chief executive of StarPro Agency, attributed Hongkongers’ rising pessimism to the US-China trade war and ongoing protests, which together have triggered a recession in local economy and hit retail, travel and catering industries.

“The drop in home price may be even more significant,” said Chong.

Midland Global noted that enquiries for foreign education surged eightfold from around 10 a month in July to some 90 in September. Among 300 respondents of its survey in mid-November, 23 per cent of those who want to send their children abroad, said they wanted to pave the way for future emigration with foreign education.

Many Hongkongers are keen to buy foreign property to get rental income to support their children’s education overseas, said Terry Chau, Midland Global’s sales director of international property. “If you know how to do it, you can save living expenses and at least HK$200,000 a year in accommodation costs.”

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