Hong Kong Property Market Corrections

香港樓市調整

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The recent market sentiment is one of uncertainty with expectations of a correction. News of landlords slashing prices are reported almost daily and market analysts are speculating on the magnitude of a property market downturn. In general, a 5 to 15% decline is considered a technical correction (we've seen three in the last eight years), while a decline of over 20% is regarded as a bear market correction. During the start of a correction, it's impossible to tell which type will unfold, but we can learn from history to make wiser decisions.

Since the 2008 Global Financial Crisis, the Hong Kong property market has gone through three notable corrections. The first occurred in 2011, triggered by the European Debt Crisis and shaken confidence, resulted in an average price drop of 6.5%. The next began in 2013 after Ben Bernanke, chairman of the Federal Reserve, stated that the US should stop quantitative easing and raise interest rates. The strong US dollar and expectations of interest rate hikes led to transaction volumes falling approximately 40% that year, though prices only declined by 5.2%. Finally, the third in 2015 was when China's growth showed signs of slowing which, together with debt, political concerns and the unexpected depreciation of the RMB, led to a 50% drop in Chinese stock markets. Fear spilled into the Hong Kong stock market, with the HSI losing a third of its value. Property prices react more slowly to economic changes, and Hong Kong's property market fell a modest 13.2% over a brief six-month period before positive sentiment returned to both the stock and property markets.

Government cooling measures in October 2009 also affected corrections indirectly and probably tempered them. Initial skepticism towards the longevity of the measures combined with low levels of debt (limited pressure on sellers) meant sellers' price expectations remained high. However, it was significantly more challenging for purchasers to invest. The result was a dramatic fall in transaction volumes from 2010 to 2016; the only purchasers had high levels of confidence or a lot of capital, which ironically led to prices rising significantly. This also meant pent-up demand in the market and during each correction buyers stepped in quickly once prices fell, dampening the declines.

Three things to keep in mind: Firstly, three corrections in ten years should tell us that corrections in the property market are normal. Don't panic! Second, meaningful corrections are typically caused by a major, systemic crisis of confidence. The 1997 Asia Financial Crisis, SARS, 2008 Gfc—only these were strong enough shocks to cause major property declines. Thirdly, they occur after a major stock market decline, typically lagging by a few months. The stock market had fallen approximately 20% from its peak this year, so it's not surprising for the property market to undergo some level of correction.

Technical Correction or Bear Market? A bear market has historically only followed major global or regional crises. Here are the main indicators to monitor:

1. Us-china trade war. Will this come to an end soon, or escalate into a global crisis?

2. Hong Kong stock markets. Will it keep falling, stay sideways or bounce back soon? 3. Interest rates. Will they increase dramatically or gradually? Remember, rates initially rise because of a recovering economy, which in turn increases property value. Historically, rates have had to reach high levels (~8%+) before they materially hurt property markets.

4. Sales transaction volumes. These have been extraordinarily low for several years due to cooling measures, only returning to average levels over the last year or so. There may still be demand waiting in the wings, which may again lead to a smaller correction than seen in stocks.

筆者於撰寫本文時,市場情緒受不確定性和預期調整影響。一般來說,5-15%的跌幅被認為是技術性調整(過去八年共出現過三次),而20%以上的跌幅則被認為是熊市調整。我們可以從歷史中吸取經驗,以作出更明智的決定。

自2008年全球金融危機以來,香港樓市經歷三次顯著調整。第一次在2011年,由歐債危機引發,導致平均樓價下跌約6.5%。第二次在2013年,前美聯儲主席伯南克(Ben Bernanke)表示,美國應停止量化寬鬆政策並提高利率。美元走強以及預期加息導致當年成交量大幅下跌近40%,而樓價僅下跌5.2%。第三次在2015年,當時中國經濟增長放緩,再加上債務和政治擔憂,以及人民幣意外貶值,導致中國股市大跌近50%,恐慌情緒亦令恆指暴跌三分之一。樓價對經濟變化反應則較為緩慢,香港樓市僅於短暫的六個月期間下跌13.2%,其後樓市與股市全面復甦。

另外,政府從2009年10月開始推出降溫措施。雖沒有像預期般直接引發市場調整,卻有間接影響,甚至緩和了調整。最初,賣家對降溫措施的壽命持懷疑態度,再加上債務水平低,意味著賣家的價格預期仍然較高。然而,這些措施令買家投資變得困難。結果成交量在2010年至2016年期間急劇下降,市場上只剩低信心高漲或資金充裕的買家,反而導致價格大幅上漲。這也意味著市場壓抑已久的需求,因此在每次調整期間,樓價一旦下跌,買家便迅速入市,抑制跌勢。

我們從中學到甚麼?首先,十年來的三次調整告訴我們,香港樓市的調整實屬正常,毋需恐慌。第二,有意義的調整通常是由一次重大的、系統性信心危機引起:1997年亞洲金融危機、沙士、2008年全球金融危機,導致樓市大幅度下跌。第三,調整在股市大幅下跌後出現,通常滯後幾個月。股市已經從今年的高位下跌了20%,所以樓市經歷一定程度的調整亦不足為奇。技術性調整還是熊市?歷史上熊市只出現在主要的全球/地區性危機之後,下列幾個是重要觀察指標:

1. 美中貿易戰:將會很快結束,還是升級為一場全球危機? 2. 香港股市:將會繼續下跌、橫行還是反彈? 3. 利率:將會急劇上升還是逐漸上升?要記住,利率上升最初是因為經濟復蘇 - 這又帶動樓價上升。歷史上,利率只有達到高水平(~8%+)才會對樓市造成實質損害。4. 銷售成交量:由於推出了降溫措施,過去幾年成交量一直處於非常低的水平,僅在過去一年左右才恢復到普通水平。市場或許仍有伺機而動的需求,亦可能再次引發一次比股市較小的調整。

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