Fewer in Hong Kong see home prices rising after run-up earlier in year

Fewer Hongkongers see home prices rising in the coming quarter after a run-up earlier in the year when buying was spurred by optimism over an economic recovery, according to a survey released by Citibank yesterday.

The number of people in the Citi Residential Property Ownership Survey who expected home prices to rise further fell to 38 per cent in the third quarter from 54 per cent in the second quarter.

The drop in sentiment among buyers was down to many entering the market in the first half of 2021, when they were optimistic about an economic recovery in Hong Kong, as well as an easing in the city’s Covid-19 situation, said Josephine Lee, head of retail banking at Citi Hong Kong.

“This leads to the housing market being quieter for the next 12 months. So this quarter, it is reasonable for fewer respondents to expect property prices to rise,” she said.

Lee also said Citi saw home prices dipping over the coming months.

“For the overall housing market, we expect prices to have peaked in August 2021, and [they are] potentially subject to a 7 per cent to 10 per cent downside until June 2022,” she said.

She attributed the prediction to factors such as front-loaded demand, stock market corrections that affected buying sentiment and concerns over policy risk.

Nevertheless, the market remained supported by structural factors including a shortage of housing supply and long-term economic growth with the reopening of the border with the mainland, she added.

Other analysts saw only a slight adjustment in prices.

“Looking at the overall drop [in property prices], this is a very minor adjustment,” said Martin Wong, head of research and consultancy in Greater China at Knight Frank, adding that housing prices had peaked during July.

Peaks in housing prices in 2018 and 2019 were followed by adjustment periods of six to nine months, when they coincided with external events, he said.

“In 2018, there was the trade war between the United States and China. In 2019, there was the social unrest,” Wong said.

“In this year’s adjustment period, we don’t see the emergence of any similar unfavourable conditions, so the adjustment period will be relatively shorter.”

If the reopening of the border with the mainland proceeded as planned, and no other unfavourable conditions appeared, home prices would increase by 5 per cent next year, Wong said.