A HOUSING MARKET BUMP IS TO COME AFTER CHINESE NEW YEAR

2020 has just begun and we're greeted with an array of negative predictions for the year. The majority of government forecasts and expert analyses are alerting the public of the sluggish market, weakening industries and rising unemployment rate that we will encounter this year; and such warnings are serving as a strong deterrent for home seekers. Data show that in December, fewer than 4,000 homes were sold while agency commission income reached its lowest point of 2019. A few large real estate agencies lost as much as tens of millions. Despite the pervading pessimism, I personally think that the housing market may very well experience a small surge following Chinese New Year for several reasons. Firstly, after December's subpar performance and a predictably stagnant January (because of Chinese New Year), home seekers are likely to start entering the market in February following two months of inactivity. Secondly, let's look at the banks' attitudes. Many banks have set new targets for the new year, with Standard Chartered and Bank of China increasing their mortgage cash rebate rate to 1.5%, announcing their optimistic stance towards the housing market in 2020. The banks' proactive approach towards home loans will certainly translate to more home buying activities. Thirdly, White Form Secondary Market Scheme (WSM) buyers will be on the move. Successful WSM applicants have been receiving their approval letters since January. Given the six-month buying period and the limited housing supply, most buyers will certainly make their purchases within a couple months of their approval and drive up home sales as a result. Last but not least, the home replacement chain in the secondary market has been revived, meaning that home owners can sell off their current self-occupied home to upgrade to a new one. As we know, the government loosened mortgage rules last October, which enabled many home owners to offload their small homes and use the profit to pay for the down payment of a newer, bigger flat and even the renovation and stamp duty costs. While the immediate boost in home sales brought on by the new mortgage rules might be shortlived, these measures have in fact had a profound, structural impact on the housing market. Personally, I believe that as the Hong Kong economy slowly stabilises after Chinese New Year, those with secure employment in the foreseeable future will reconsider entering the market. After all, it is the working class and the underprivileged sections of our population—people who tend to rely on the public housing schemes—that suffer the most from the economic downturn. And those able to afford homes in the private market are not heavily affected by the slow economy. Currently, the biggest threat to the city's housing market is the tension between the US and Iran. When and if the two countries start a war, crude oil supply will be severely affected, leading to a huge surge in oil prices that will destabilise the global economy. As always, it is much more difficult to predict the external factors than the internal. With President Trump ramping up his re-election campaign in 2020, his actions and policies are likely to become even more erratic, which spells increasing risks for Hong Kong's housing market.