Prices and sales rise in Hong Kong but vary according to location

Residential property prices in Honk Kong increased for a third month in a row in Hong Kong in September while sales were up for a fourth consecutive month, the latest analysis report shows.

Overall sentiment in the Hong Kong housing market continued to improve although there were some signs of imbalances between individual regions, says the report from the Royal Institution of Chartered Surveyors (RICS).

A net balance of 57% respondents to the monthly survey report price increases and 31% growth in sales over the three months to the end of September 2016. As a result RICS says that the outlook for the fourth quarter of the year is firmly positive.

But surveyors are more cautious about the medium term outlook, predicting that prices are set to fall by 0.4% over the next year compared to a 3.5% increase reported in the previous survey. They added that new housing supply due to come on the market in 2018 is likely to put pressure on price growth.

New buyer enquiries moderated but they were still above the lows recorded at the start of 2016. A similar pattern can be seen in the lettings marker with landlord instructions continuing to rise despite a slightly more significant moderation in tenant demand.

Some respondents suggested that the increase in prices could be due to owners attempting to offload properties to take advantage of the recent turnaround in prices. It was also noted that some landlords have decided to sell rather than continue renting out properties.

Some 49% of respondents expect rents to increase in the fourth quarter of the year but as in the sales market the medium term outlook is more muted with rents predicted to rise by 1.5% over the next year, down from the 4.9% expected in the August survey.

Details from the report suggests that the imbalance between new buyer enquiries and new instructions to sell were minimal in Hong Kong Island and the New Territories but in Kowloon there were far more new instructions and few enquiries from buyers.

Similarly, while the majority of respondents expect prices and sales to rise in Hong Kong Island and the New Territories over the next 12 months both are predicted to fall in Kowloon and the report suggests that this sentiment may be due to falling prices in Kowloon.

In Kowloon prices are expected to fall by 5.4% over the next year prices in the New Territories and Hong Kong Island are expected to increase by 2% and 1% respectively. All three figures are down from the August report which said prices in Kowloon would increase by 2.5% and in the other two locations by 3.9%.

‘Although the Hong Kong residential remained robust at a headline level, some underlying imbalances have begun to emerge, in particular evidence that owners are responding to price increases by offloading units onto the market,’ said Sean Ellison, RICS senior economist.

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