Don’t Assume Turbulence Will Lead to a Crash

樓市短期起伏非暴跌先兆

樓市短期起伏非暴跌先兆

Continued large-scale demonstrations across Hong Kong, and worries for global economic slowdown have taken a serious toll on the confidence of Hong Kong’s property market in recent months. Scores of articles describe poor sales launches and headline transactions at steep discounts, but developers have been offering discounts on new projects to boost sales, with a high degree of success. We believe this will persist for the rest of the year, but it is not a sign (nor a trigger) of a dramatic crash in prices.

Look Beyond Headlines

According to the Lands Department, September’s property sales transactions totalled HK$36.4 billion, a three-year low; 16% lower than August, 29% lower than the monthly average over the last five years. However, prices have moved downwards to a lesser degree. The latest data on the overall residential market(1) indicated that, as of August, prices had fallen a mere 2% from their all-time high in May. The Centa-city Leading Index showed a decline of 4% in secondary private home prices over the last seven weeks, suggesting that September may have seen somewhat larger price declines. Although these certainly point to a softening in prices—logical in the current environment—it is a far cry from a crash. Prices and volumes do not often move in tandem. Yet, articles will often cite a move in one or the other as defining current sentiment, which can be misleading. Since the government began implementing cooling measures, monthly sales volumes have been very low – hovering around (or below) SARS levels, however, prices have risen dramatically. So why would a decline in volume now be evidence of a market crash? Other headlines have pointed to specific cases where there was a 20-30% discount as evidence that we’re in the midst of a crash. However, these are isolated cases that shouldn’t be referenced as a trend. In any market, there will be owners who, for whatever reason, offer a steep discount to ensure a swift sale. One should instead look at market-wide statistics which show relatively modest price declines.

Other Indicators of Demand

Recent first-hand sales should be looked at to understand the market sentiment. In mid-august, all 354 flats were sold at Billion Development’s The Aurora in Tsuen Wan, with 8,900 buyers reported as having registered bids. The flats were priced at approximately 10% below market prices in the neighbourhood. Considering the instability at the time, the pricing strategy was successful and has been adopted by other developers. Wheelock recently priced its Tseung Kwan O projects about 8% lower than others in the area and has sold over 80% of the 816 flats in recent weeks—a solid result given the tepid environment; showing that there is still substantial demand for properties, and an 8-10% discount has been sufficient downside protection to convince many to invest for the long term. Indeed, the government is looking to reinvigorate demand for property. Carrie Lam’s policy address announced an increase in the cap on properties eligible for 80% and 90% LTV mortgages (to $10M and $8M, respectively) under the Mortgage Insurance Programme, making it easier for buyers in those ranges to finance purchases for second-hand homes.

Don't Forget Supply

Property values have risen over the last several decades because of undersupply relative to demand, a counterweight to the recent decline in active buyers, and there are limited signs of this changing. Prominent local advocacy group and non-profit organisation, Our Hong Kong Foundation, warned in an April report that new housing supply is forecast to be 10% lower than the previous four years. The policy address stated the government will provide 10,000 “transitional housing” units over the next three years. While this is a positive step towards providing housing for those in need, it will have a marginal impact on real supply. With about 1.2 million residential units in Hong Kong, an additional ~3,300 units per year only increases total supply by 0.25% annually – far less than population growth (~1%) and GDP growth (3-4%/year, though this year will clearly be much lower).

A Correction, Not a Crash (For Now)

There are larger, external factors that support long-term optimism including stabilising Us-china tensions, low interest rates, high-performing US stock markets which show global financial sentiment to be stable. In short, Hong Kong’s property market is undergoing turbulence, not a crash. The impact of the demonstrations on both sentiment and the economy are indisputable and we don’t know the extent unemployment (which has been at record lows) will rise. The government may use other tools to support property ownership, and ultimately many people are eager to own real estate. Unless that desire fundamentally changes, any correction in prices is likely to lead to buyers emerging and stabilising the market, at least in the medium term.

樓市短期起伏非暴跌先兆

香港持續不斷的大型群眾活動，再加上對全球經濟放緩的擔憂，近幾個月來嚴重影響本港地產市場。有見及此，發展商最近都以低於市價開盤來催谷銷量，而策略亦明顯見效。筆者認為這種做法將在今年餘下日子持續，但這並非樓價暴跌的訊號。

媒體報導以外的數據

根據地政總署的資料，9月份的整體物業銷售交易總額為364億港元，為3年低位。近日不少報導指出，有業主減價2至3成將物業賣/租出，證明樓市正處於跌市之中。但這些都是少數例子，不應視之為趨勢。因此，若宏觀整個市場的數據，都顯示到目前為止，樓價下降幅度相對較平穩。

其他反映需求的指標

8月中旬，億京發展成功出售荃灣The Aurora全部354個單位，考慮到本地市場持續不穩定，發展商開價比鄰近的二手物業低約1成，而該定價策略可謂非常成功，有見及此，其他發展商於推售全新一手盤亦採相同策略。

的確，政府正在尋求重振投資地產的需求。特首林鄭月娥於10月16日發表的施政報告中宣布，將高成數按揭的上限提高，分別為1,000萬可序造8成按揭及800萬可造9成按揭，變相令買家更容易於二手市場上車。

房屋供應持續低企

施政報告還指出，政府將於未來3年內提供10,000個過渡性房屋，此舉無疑可為基層解決住屋需求，唯未能真正解決房屋供應問題。全港約有120萬個住宅單位，以每年增加約3,300個單位計算，總供應量每年僅增加0.25％，遠低於1%的人口增長及每年約3-4%的GDP增長（儘管今年顯然要低得多）。

樓市（目前）正在調整，不是暴跌

此外，有更大的外在因素促使樓市保持長期的樂觀發展—中美緊張的局勢似乎已經穩定下來，加上低息環境持續，有效支撐著整體樓價。

樓市短期的反覆或波動並不代表出現明確的下跌訊號，雖然情況有可能會變差，但筆者認為短期內並不可能發生。大型群眾活動對市場情緒和經濟的影響是無可爭議的，而且我們並不知道失業率將會上升到什麼水平。但政府有機會使用其他方法來支持樓市，否則至少在中期來看，任何樓價調整都可能釋放買家購買力並穩定市場。