August property deals dive

Finance | Kevin Xu 4 Sep 2019

Property transactions in Hong Kong during August dropped by nearly 20 percent, and the pattern is expected to continue even as many new flats go on the market in the second half of the year.

The number of sale and purchase agreements for all property units during the month amounted to 5,159, data from the Land Registry showed.

That was down by 19.1 percent from July and 22.9 percent year-on-year.

As for what is in store for the rest of the year, Jones Lang LaSalle expects up to 16,000 flats to hit the market before 2020 even though developers have slowed the pace of launches.

"We maintain our view that the housing market will remain under pressure over the foreseeable future and expect prices to correct in a range of 0-5 percent for the full year despite rising 3.9 percent in the first half," Jones Lang LaSalle said.

The firm also predicts that prices in the New Territories, where around 60 percent of upcoming launches are in store, are likely to underperform the market.

Meanwhile, Asian property expert Peter Churchouse, who predicted a market crash in 1997, said worsening housing conditions are at the core of much discontent in Hong Kong.

Churchouse, the managing director of Portwood Capital, noted that worsening housing affordability has been one of the root causes of rising extremism and populism in many parts of the developed world.

"Hong Kong's housing market is probably the most volatile in the developed world," he went on in a report.

"This is largely due to the pegged currency,' he said, referring to the HK dollar-US dollar linkage.

"This means that interest rates in Hong Kong have to follow those in the United States to a very large extent."

However, he added, "this also means that rates can sometimes be too high or too low in relation to Hong Kong's economic circumstances."



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