HONG KONG, CHINA – Cushman & Wakefield, a global real estate consultancy, revealed that the growth in home prices showed no signs of abating as demand remained strong. This is after a 12%-17% surge in home prices so far in 2017.
However, transaction volumes went down, suggesting slow sales in the secondary market and buyers holding on as prices trended upwards. The sentiment in the property investment market remains hot, with investors eyeing en-bloc office properties with vertical retail elements.
Cushman & Wakefield’s Mr Alva To commented, “The upward revision (to the GDP growth) clearly signalled the optimism over the prospects of the local economy, which underpins home purchasing power. The unemployment rate dipped to 3.1% from 3.4% in the same period last year, which together with the lack of major movement in the interest rate, are stimulants of home purchases. These would lend support for another 5% growth in home prices through year end.”
In the property investment market, 56 major transactions (each with a unit value of more than HK$100 million) were recorded in Q3 thus far. The total consideration of these deals, at HK$21.9 billion, indicated a significant growth in deal size compared with Q2. Notable transactions in the office sector have become the highlight of the summer investment market, which have led the other sectors by the most number of major deals and the amount of considerations.
Earlier in June this year, Hong Kong’s financial secretary Paul Chan warned potential buyers to “be careful” about buying property in the world’s most expensive housing market, as moves by the Federal Reserve to unwind its balance sheet may shrink money supply.
Mr Chan warned that Hong Kong’s property market is in a “dangerous situation” and is vulnerable to a correction.
Hong Kong chief executive Carrie Lam describes housing as citizens’ No. 1 concern and recently set up a task force on increasing land supply as she tries to rein in ever-escalating prices.