Hongkongers are optimistic about home prices rising this year, Citi survey finds

Lam Ka-sing
·3-min read

Hongkongers are optimistic about home prices rising this year, having adapted to the cyclical challenges of the Covid-19 pandemic, Citibank said.

A third of respondents to the Citibank Q1 2021 Residential Property Ownership Survey said they believed that property prices would rise this year, up from 16 per cent in the same period last year, while 47 per cent expected them to remain stable, up from 28 per cent last year.

The percentage of respondents that expected home prices to drop declined, from 57 per cent last year to 20 per cent this year. The results of the survey were released on Tuesday.

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“Even with the occasional fluctuations of the outbreak, many still expect property prices will rise in the coming year, restoring confidence in the development of the property market. Lately, even more people [have been] touring real estate [projects],” said Josephine Lee, head of retail banking at Citi Hong Kong. “With the gradual retreat of the outbreak, the economy is expected to recover further, and the conditions are right to unlock the accumulated demand for home ownership.”

Property transactions have soared this year thanks to low interest rates and demand from new immigrants. These factors are offsetting the impact of increased supply from people selling up and leaving Hong Kong, paving the way for home prices to rise, analysts and data suggest.

A random sample of more than 500 people were polled for the survey, which has been running since 2010, by University of Hong Kong Social Sciences Research Centre. The poll was conducted in March.

The view that home prices could rise is also held by US bank Morgan Stanley, which in a report published over the weekend, estimated 3 per cent growth in 2021 and 5 per cent next year. This growth will be driven by a combination of low supply, with less than 20,000 private homes being completed this year, decent demand following a 7 per cent year-to-date rise in the Hang Seng Index, peaking unemployment and low interest rates. It will also be helped by limited room for further regulation, the bank said.

It also said that while the city’s population declined last year, some indicators pointed to an increase in Hongkongers’ intentions to leave this year as well. And while property owners leaving Hong Kong may choose to sell their flats, such sales could be absorbed by a rising number of new permanent residents and a supportive macro environment.

According to the latest data from the city’s Rating and Valuation Department, the private residential property price index in February reported an increase of 0.9 per cent to 384.5. The index rose for two consecutive months to a seven-month high despite a record recession in Hong Kong’s economy and a rising unemployment rate.

Across the market, many buyers have seized opportunities to snap up homes following a price correction. For instance, the secondary market turnover in Tseung Kwan O district surged 38 per cent month on month to 454 in March, another record high, according to Centaline Property Agency. The transaction volume of villas also jumped 1.6 times to HK$4 billion in March, amid a Lunar New Year boom and quantitative easing, Centaline said.

Buyers from mainland China have also buoyed the overall housing market. In the first two months of this year, their home purchases rose 40.6 per cent year on year, according to Midland Realty. Some of them are “new Hongkongers” who recently acquired their Hong Kong permanent residencies.

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