Hong Kong’s floundering residential property market has not yet bottomed out, and the road to recovery will be long and difficult given headwinds including high interest rates, a glut of unsold new units and a lack of buying power from mainland China, according to JLL.
Factors including a volatile stock market, a challenging external economic environment and a decrease in new births and marriages are also affecting housing demand, the real estate company said in its midyear property market report, released on Tuesday.
“Hong Kong’s housing market is now having the longest price adjustment since 2008, and the market has not found a bottom,” said Joseph Tsang, chairman at JLL in Hong Kong. Home prices fell by 1.2 per cent quarter-on-quarter in the second quarter of 2023, after rebounding by 4 per cent in the first quarter, and have plunged 15.9 per cent from a peak 20 months ago, JLL said.
The company now expects prices to drop 5 to 10 per cent in the second half, resulting in a total drop of 5 to 8 per cent in 2023.
The number of unsold units in completed projects is the highest since 2007, the report added. There are 83,000 housing units available in Hong Kong, with 18,000 in completed projects and the rest under construction. In addition, about 25,000 more units are expected to hit the market in 2023, according to JLL.
“Based on observations from previous cycles, current conditions do not warrant a sustainable home price recovery,” Tsang said, adding that given the headwinds surrounding the sector, the current down cycle will be longer than previous troughs.
Source: SCMP
