Home prices will not go unscathed, may shrink at least 5%, say experts

The prolonged "Occupy Central" movement is posing a longer-term threat to the all-important property market although prices have remained firm so far, real-estate analysts said.

Having risen a total of 7.7 percent last year and 6.4 percent in the first eight months this year, property prices are set for a correction, they said. The uncertainties created by the illegal protests, which have already dragged down economic growth, could be an excuse for a property-market correction, the experts reckoned.

"I can't say I'm positive about next year's housing market," said Jeffery Ng, senior executive director of Hong Kong Property Services. "I believe there will be some pressure on apartment prices, as we're already seeing a sharp fall in turnover in the secondary market," he said.

Ng predicted that average home prices will fall by at least 5 percent next year.

Concern over the property sector's longer-term prospects arose after a UBS report said it expected Hong Kong's overall home prices to slip by between 5 and 10 percent in 2015 amid slower economic growth, a higher unemployment rate and potential higher mortgage rates.

The report said positive factors, including high rentals, low mortgage rates and limited new supplies, are losing ground, which will reverse soaring second-hand home prices and maintain the decreasing trend of new home prices.

It also predicted the government will release more development land at favorable prices from next year. The projected increase in homes supply can greatly alleviate the estimated shortfall by 18,000 to 19,000 units.

Joanne Lee, manager of research and advisory at Colliers International, agreed with UBS' projections. "New supplies (of flats) will remain steady next year," she said. "Because a large portion of local demand has already been met by supply this year, the possibility of a significant price adjustment in 2015 is real enough."

Lee forecast that prices of small-to-medium sized apartments in the secondary market would fall further when banks begin raising mortgage interest rates.

Midland Realty estimated that the number of overall registered residential and non-residential property transactions in November, which mainly reflects the turnover situation of October, is likely to hit a six-month new low.

Vincent Cheung, national director of Greater China at Cushman & Wakefield, took a different view. He said the property market outlook doesn't look as bad as the economic factors may suggest.

"The actual number of apartments ready for occupancy has remained stable and any interest-rate increase in the coming year would be modest," he said.

agnes@chinadailyhk.com

(HK Edition 11/07/2014 page8)