Prices and sales set to continue increasing in Hong Kong over the near term

Residential property price and rents are expected to continue to increase in Hong Kong in the short term, according to the latest survey report.

Overall, headline price inflation over the past three months has remained near cyclical highs and in July sales volumes were also reported to have increased at a similar pace to June.

The report from the Royal Institution of Chartered Surveyors (RICS), points out that this is despite July registering the most modest pace of increase in buyer demand thus far in 2018 which was largely driven by contributors from Hong Kong Island, indicating little change in demand from June.

Meanwhile, although supply remained constrained in the New Territories, survey contributors reported that the supply of properties for sale increased at a faster pace than demand in both Kowloon and the New Territories.

Demand from buyers in mainland China also increased at a more modest pace than in June, as mainland enquiries for properties in the New Territories slowed.

The confidence index, an amalgamated measure of short-term price and sales expectations, moderated only slightly in July. Indeed, both prices and sales are expected to increase at a robust pace over the next three months.

However, although price expectations over the next year remain elevated, sales volumes are seen increasing at a more moderate pace over the same period. Against this backdrop, aggregate one year price forecasts came in below the three month moving average for the second month in a row.

Survey contributors now see prices increasing by 3% over the next year on Hong Kong Island, by 4% in the New Territories, and by 4.9% in Kowloon.

The lettings market was also seen to maintain positive momentum as tenant demand increased at a faster pace than did the supply of properties to rent and rents are expected to maintain their recent pace of inflation over the next three months, although growth forecasts have moderated in recent months across all three regions.