Is the Property Market Truly Falling?


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Last month, Hong Kong’s second-hand residential market was quiet in terms of transactions; sources indicate that among the ten largest housing estates, there has only been one transaction over the weekend, setting a record low in three years. The prospect that the market will trend downwards during H2 of this year seems certain; on the other hand, several new developments are ready for sale. The first to launch last week was the project above Nam Cheong station, with 364 units launched and ending up with 354 sold—a commendable success rate of 97%. The accumulated applications for next week’s new launches are doing well too; I’m expecting good sales results as well. The overarching trend is still cool in the second-hand market and hot in the first-hand market. Although new units are transacting well, additional units have been restrained and against an objectively unfavourable backdrop for developers, the focus is on the amount of supply as opposed to amount of money. The wish is that prices for new units will maintain as is instead of rising again.

This upward market trend should level out, or even take a dip, in the second half of the year. The real question is whether this down trending is a mirage; after half a year of adjustments, will prices in the next year really fall, or rise once again? The key factor here is obviously financial movements. Housing prices will naturally rise and fall along with the economy. The Us-sino trade war and interest changes are sure to greatly affect our economic circumstances.

The chairman of the US Federal Reserve has reiterated the finance sector in the US is doing very well and requires a gradual interest rate hike. The market has in fact already digested the effects of the Fed interest hikes, which are a way to stablise the economy should there be undue financial stress resulting from Trump’s trade war. The interest rate increases are therefore needed, and also creates leeway for future decreases.

Trump’s trade war has had its arrowhead aimed at China since April, stirring up national fervour in American favour, but the effect of playing the “China card” will only weaken. America’s commodity prices will increase and there has already been outcry from the commercial sector; it’s only a matter of time before the public joins in when these price surges impact their daily lives. Trump himself is tied up in lawsuits and will not hesitate in fanning fires to draw the public gaze elsewhere. If you believe that the outcome of the American mid-term election in November is already set, and Trump will patch up relationships with various nations, then this year’s property price drop will have been a false one. Alternatively, should the trade war escalate and damage the global economy, housing prices will naturally continue its downward slide, resulting in a true market decline.

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