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Kamis, 12 September 2019 13:38:00

Residential sales volume and prices almost back to Q1 level amid ongoing unrest and trade tensions

Home transaction volumes fell by 45% in first two months of Q3 from same period in Q2 as sentiment turned cautious due to trade tensions and local political issues

Prices at representative residential estates down by 3-5% from peak level in June
The number of major transactions in the property investment market dropped 55% from Q2 with a significant decline in office deals.
 
HONG KONG,  - 10 September 2019 - Ongoing social unrest and the escalation of the Sino-U.S. trade tensions have affected market sentiment in Q3, with property transaction volume and prices trending towards the level of Q1 of this year.

Prices of some representative estates have retreated by 3-5% in Q3 thus far from the peak level in June.

The investment market has also been quiet, with the number of major transactions dropping 55% quarter-on-quarter, as investors remained on the sidelines.
 
Since an escalation in trade tensions arising from new tariff threats in May sent jitters across global stock markets, plus local political issues caused a change in buyers' sentiment, property sales began to drop in June after reaching a peak in May. In terms of the number of residential sales & purchase agreements (residential S&Ps), sales fell from 8,208 in May to less than 5,000 in June through to August.

The combined residential S&Ps figure of July and August amounted to 8,889, which was down by 45% from the same period in Q2, and was comparable to the level in the first two months of Q1 this year (8,632). Mr Alva To, Cushman & Wakefield's Vice President, Greater China & Head of Consulting, Greater China commented, "As the market sentiment remained cautious over the prolonged unrest and new tariff announcements, it is expected that the residential S&Ps will stay around the level of 4,500 in September."
 
Home prices retreated along with the drop in sales. According to government figures, the price index of private domestic units has seen a slight drop in both June and July, and Cushman & Wakefield expects a further drop of 2.7% in August from the peak level in May. In terms of actual prices, by mid-September, some popular mass residential estates such as City One Shatin and Taikoo Shing have recorded a drop in prices of 4-5% from the peak level in June.

Prices for luxury residential represented by Residence Bel-Air and The Habourside were on a firmer footing with a drop of about 3% from the June peak. Year-to-date prices in mass residential properties such as City One Shatin and Taikoo Shing still showed growth of 19.9% and 14.9%, respectively, from the beginning of January. Meanwhile, prices in luxury projects like Residence Bel-Air and The Habourside have increased by around 10% thus far.
 
Mr To commented, "Despite the worsened market sentiment and drop in sales, landlords generally have strong holding power and thus panic sales have so far been sporadic.

Given the underlying factor determining the price trend is economic fundamentals, and as the unrest persists, the tourism and retail sectors have been hit. Over the long run this will hurt the status of Hong Kong as an international financial hub and possibly raise the unemployment rate, which in turn will affect the economic performance, and home prices will be under greater downward pressure.

Should the current unrest continue, we would expect a further drop in home prices by 5-10% through the end of this year."  (roc/red/*) #for information on collaboration publications, questions and other e-mails riauonemedia@gmail.com
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