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Residential Market Continues to Rise
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June 21st, 2009 |
Hong Kong home prices have brushed aside the
fallout from the global financial crisis and
risen about 15 per cent so far this year.
"It's not rational for home prices to grow
so much in such a short period."
But underpinned by low interest rates, a
rally on the stock market and an influx of
hot money, the Hong Kong property market has
shown strong resilience to shrinking
economic growth in the first half, and
investment banks Goldman Sachs and Nomura
International are positive about prospects
for the second half.
In light of improving data, Goldman upgraded
its property market outlook earlier this
month and now expects home prices in both
the primary and secondary markets to rise a
further 5 per cent in the second half.
Nomura raised its full-year forecast for
mass-market home prices this year to an
increase of 22 per cent from 12 per cent.
But Mr Ngan, who was a property bull in the
past, has turned conservative. Buyers were
lured back to the market by relatively low
prices in the first half, he said, but until
convincing signs emerged that the economy
was on a sustainable growth path, property
prices would remain flat or even decline
modestly.
Shih Wing-ching, the chairman of Centaline
Holdings, expects a price correction in the
third quarter after the rapid growth in
prices. "Quite a few wealthy people regret
missing the latest rally. They will probably
jump on board when prices soften a bit, and
therefore the correction will be limited,"
he said.
Aaron Fischer, the head of Asian property
research at CLSA, expects home prices to be
flat in the second half, although they may
rise slightly, as the market is likely to be
supported by liquidity in search of returns
that exceed returns on bank deposits.
He also pointed out that although mainland
buyers represented a small proportion of
total demand, their participation helped
push up the prices of higher-end flats.
Fung King-keung, the managing director of
Jones Lang LaSalle Hong Kong, raised
concerns over falling residential rents,
reflecting declining investment returns in
the market. But he said the limited supply
of luxury homes would allow them to
outperform other segments in the short and
longer terms.
Craig Shute, the senior managing director,
CB Richard Ellis Hong Kong, Macau and
Taiwan, expects luxury residential prices to
climb a further 10 per cent in the short
term amid low interest rates and ample
liquidity.
However, Alva To Yu-hung, the head of
research at DTZ, is cautious about the
immediate outlook for housing, in the face
of the economic recession and declining
exports. "I expect home prices will go
up for two more months before retreating.
Our conservative forecast is that prices
will retreat about 10 per cent by the end of
the year," Mr To said. He cautioned
that the proportion of investment buyers in
overall transactions had risen to above the
level seen in 1997, when about 35 per cent
of total transactions came from confirmor
transactions - the resale of a flat before
the completion of a sale and purchase
agreement. That is an indicator of
speculation.
Investors now take a longer-term view. Up to
40 per cent of buyers in the secondary
markets were now buying for short-term and
medium-term gains from reselling their
units, Mr To said, and he insisted that
without end-user support, price gains would
not be sustainable.
BOC International head of research Manfred
Ho Chu echoed this view. Reasonable
affordability, rising demand from mainland
investors, low interest rates and limited
supply could help cushion a decline in home
prices, he said, but the deteriorating
economy in the second half would still cast
a pall over property prices.
Source: South
China Morning Post |
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