Lack of supply helping property prices, rents and sales in Hong Kong to rise
Demand for property in Hong Kong is increasing at a faster pace than supply, leading to rising prices and rents, the latest monthly market report shows.
Prices are poised to maintain a steady year on year growth in the coming months, despite a slight modification at the peak of the market at the end of 2017, according to the March 2018 survey from the Royal Institution of Chartered Surveyors (RICS).
However the Confidence Index, an amalgamated measure of short term price and sales expectations, moderated to 31 in March from 44 in February. Even although the three month outlook is trending slightly lower, respondents are expecting prices in sales to increase over the next quarter.
Overall, respondents remain optimistic for price growth over the next year and 12 month price expectations are the highest they’ve been since March of 2017, and are the second highest reading since the launch of the survey.
The report also shows that price forecasts for the next year have moved back above the three month moving average in all regions and some of the upwards pressure on prices has likely come from expectations for dampened supply.
Indeed, expectations for supply growth have begun to diverge from that of prices, and this is most pronounced in the New Territories, which also has the largest stock of housing of all three regions covered by the survey.
RICS says that buyer enquiries continue to increase at a faster pace than the supply of new properties to buy, particularly in the New Territories. This may help to explain why respondents’ price forecasts for the New Territories are as bullish as those for Kowloon and Hong Kong Island, despite fewer respondents reporting an increase in demand in the former than the latter.
Respondents also report a slightly more demand from mainland Chinese buyers in March and the majority are expecting credit conditions to tighten over the next three months. However it remains to be seen whether both of these developments are transitory.
In the residential lettings market, the outlook for rents remains positive due to an increase in tenant demand which continues to outstrip the supply of new properties to rent.