- Gauge shows a huge swing in sentiment from June – when peaceful demonstrations kicked off
- Protests are ‘the main catalyst cited as driving market pessimism,’ the Confidence Index finds
Real estate professionals expect home prices, sales and rents will fall in Hong Kong over the next 12 months as protests continue with no end in sight, accordingly to a newly released survey.
That is quite a change from the survey in June, the month peaceful protests kicked off in a colourful stream of umbrellas. Then the real estate professionals said they expected prices, sales and rents would go up.
The Confidence Index " by the Royal Institution of Chartered Surveyors (RICS) and local online property listing portal Spacious " shows positive or negative sentiment of respondents, with higher numbers signalling stronger feelings.
In August, overall confidence in the property market was negative 76. That was down from negative 54 in July and positive 4 in June.
"Although some survey respondents cited tariff escalation between China and the US as a headwind, the ongoing political unrest continues to be the main catalyst cited as driving market pessimism," said Sean Ellison, RICS senior economist for Asia-Pacific.
"Participants also commented that a cessation of the protests appears to be unlikely in the near-term, which perhaps contributed to the more subdued medium-term outlook for the market," he added.
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In its four years, the survey has only seen sentiment more bearish in three months: In January and February of 2016, when the Confidence Index stood at negative 78 and negative 86. The US increased interest rates in late 2015 and Beijing clamped down on capital outflow, both of which hit Hong Kong's property market. The other month was last October, when the trade war dampened sentiment.
In the latest survey, a total of 170 RICS members were asked about their opinions on home prices, sales and rents.
The survey for the first time found negative sentiment about rental demand " nearing negative 20 per cent. Some property professionals said they have heard from a number of expatriates and local Hongkongers saying they want to move out of the city.
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Overall, the respondents said they expect home prices to fall 4.6 per cent in the coming 12 months, property transactions to drop by more than 5 per cent and rents to slide 2.5 per cent.
In the June survey, released June 15, or the week following the first huge Sunday protest on June 9, respondents said they expected home prices would rise 3.7 per cent over the following 12 months.
Beginning in July, the protests have became more disruptive and violent, leading stores, subway stops and roads to be shut down.
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The protests " which at times have erupted into fires and vandalism at MTR stations, and seen the use of tear gas and water cannons by police " have led some property developers to delay sales dates and lower prices.
As people have grown more fearful about the impact of the protests on the economy, they have been less interested in buying homes, data suggests.
The lived-in home price index, for example, fell 0.7 per cent in July from May, according to the city's Rating and Valuation Department.
Meanwhile, Sun Hung Kai Properties last week priced the first batch of Cullinan West III flats in Sham Shui Po at HK$21,722 per square foot, about 25 per cent below secondary market prices. The price was about the same as it was two years ago for units in the second phase of the same development.
New homes launching in the city have started to be priced at below the prevailing secondary market price.
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