Homes slump 'bottoms out'

Top News | Dominique Nguy 21 Jul 2016

Morgan Stanley and Citibank believe the Hong Kong property market has bottomed out, forecasting that home prices will rise by 5-8 percent in the second half of this year due to low interest rates and the release of "suppressed demand."

A report by Morgan Stanley said as the worry of an interest rate hike lessens and the unemployment rate remains at a relatively low level, it is predicted that the "suppressed demand" for flats may help lift the home price.

The bank forecasts home prices going up by 5 percent in the second half.

Meanwhile, Citibank reports a recovery in the number of transactions in the secondary market recently and pointed out that the rebound in transactions is due to the accumulation of enormous demand.

The bank pointed out that low interest rates and the drop in home prices have made local flats more affordable.

With interest rates unlikely to go up in the next 12 months and home prices becoming more affordable, Citibank believes there will be a release of suppressed demand and predicts the home price will go up by 8 percent in the second half.

Buggle Lau Ka-fai, chief analyst at Midland Realty, said the limited supply of local super-luxury flats will spur an increase in prices.

Meanwhile in the primary market, Sino Land (0083) offloaded 22 flats of its new project in Sai Kung, Park Mediterranean, in the first hour of sales yesterday.

Hang Seng Bank (0011) head of retail banking and wealth management Margaret Kwan Wing-han said there were only an average of 2,000 new mortgages per month in the first quarter, but there had been an average of around 6,000 per month in the second quarter.

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