Analyst expects home prices to drop up to 13pc

Business | 17 Sep 2019 6:09 pm

Local home prices are expected to fall by 8 to 13 percent in the next few months due to weak market confidences amid economic and political uncertainties, Steven Wong, investment analyst at Harris Fraser said.

While mid- to long-term home price are less affected since the overall residential demand still exceeds supply, he said. Wong expected the growth in home price growth will slow down with higher volatility in the next four years, as the supply of new private residential properties is estimated to surpass demands for self-living.

The SAR government is considering to invoke Land Resumption Ordinance to increase land supply by resuming farmland from developers to build public housing amid ongoing social unrest, but Wong said its impact might not be reflected in the short term, given the political uncertainties and prolonged legal process.

He added it will be worth watching to see how the government will change the use of farmland, such as the proportion for residential use and the ratio of public and private housing.

Given that Hong Kong faces demographic changes, purchasing power for small and tiny flats targeting first-time home buyers is projected to decline after 2022, so the upside potential for home prices of these units will be limited, Wong said.

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