HONG KONG: Hong Kong’s private home prices fell for the first time in six months in June as consumer confidence was shaken by prolonged Sino-US trade tensions and growing social unrest at home.
Prices in one of the world’s least affordable property markets fell 0.8% in June from a month earlier, compared with a revised 1.3% increase in May, government data showed yesterday.
The city’s open economy is being hard pressed by the year-long US-China trade war, China’s economic slowdown and more recently mass demonstrations against the city’s government.
Some Hong Kong tycoons have started moving personal wealth offshore before June amid concerns over proposed extradition legislation which would have allowed local people to be sent to mainland China for trial.
Large protests, which began in June, have increasingly turned violent in recent weeks.
Hong Kong’s residential sales volume tumbled 43.6% in June from May to a four-month low, according to Land Registry data early this month.
Strikes and demonstrations could continue for months, further weighing on home prices, some realtors say.
“The (price) index is within expectation. Judging from the recent social movement and market condition, the index may further correct downward in the next one, two months, ” said Thomas Lam, executive director of Knight Frank, who has forecast a 5% drop in the second half.
After a brief correction late last year triggered by rising Sino-US trade tensions, Hong Kong home prices had rebounded nearly 10% in the first half of 2019.
Over the past decade, ultra low interest rates, limited housing supply and large capital flows from mainland Chinese buyers have pushed housing prices up more than 200 percent.
In June, a flat of 60 sq m on Hong Kong Island cost an average of HK$11.1mil (US$1.42mil), according to official data.
Some property agents said the protests will have only a short-term impact on the housing market, which will be supported by pent-up demand, a shortage of land and expectations of lower interest rates.
Colliers International forecast housing prices will fall 4% in the second half, while Midland expected housing prices to rise another 3% to 5%.
On the supply side, property developers could be more sensitive to market sentiment.
“They might slow down construction work on their new projects if market sentiment and the outlook are not optimistic, ” property consultancy JLL said. — Reuters
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