Home News Hong Kong home prices plummet to five-year lows and could drop further

Hong Kong home prices plummet to five-year lows and could drop further

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Hong Kong skyline as seen from Hong Kong Island.

Ingo Schultz | Image Broker | Getty Images

Hong Kong residential property prices plunged to an almost five-year low as rising interest rates and a massive exodus of foreign workers pushed prices in Hong Kong down. one of the most expensive cities in the world to work in.

Industry insiders warn that the worst is yet to come.

Hong Kong house price index in October Recorded the lowest level of the gauge at 352.4, down 2.4% from the previous month Since November 2017.

According to Natixis’ report, the city’s Property prices could plunge 25% from their last peak in late 2021 before the recovery begins.

slump expected It will grow 12% in 2023 and then just 2% in 2024, according to analysts led by Alicia Garcia Herrero.

world’s best hong kong most affordable housing market, saw a drop in some of its largest private housing estates.of Yomomachia 393-square-foot apartment currently listed at HK$5.98 million This is approximately HK$15,216 per square foot, a 20% reduction compared to the previous month.

A confluence of factors, including weak growth projections and mainland coronavirus policies contribute to a grim outlook, but Hong Kong’s immigration crisis and snowballing interest rates remain prominent obstacles.

While there are pressures from declining birth rates and a rapidly aging population, immigration collapse and immigration heatwaves are adding fuel to the fire.

Hong Kong recently raised its benchmark interest rate 4.28%, reducing borrowing costs to Highest since March 2008.

Nelson Wong, executive director of research at real estate firm Jones Lang LaSalle, told CNBC, “The deteriorating economic environment and rapidly rising borrowing costs, both in Hong Kong and globally, are the most important drivers of property price declines. ‘ said.

“The magnitude is a little more severe than expected, largely due to escalating geopolitical risks. [from the Ukraine war] It’s a steep rate hike trajectory,” Wong continued.

Population growth is an important factor

Hong Kong Chief Executive Officer John Lee at a press conference following a policy speech session at the Central Government Complex in Hong Kong, China on October 19, 2022. (Photo by Anthony Kwan/Getty Images)

Anthony Kwan | Getty Images News | Getty Images

What can stop the decline

While the downturn in the real estate market is likely to continue,, The pace of decline could slow over the next two years, according to Natixis.

French investment bank A limited decline in 2024 is the absence of further economic and policy adjustments to strengthen sentiment.

However, analysts say it could recover as China lifts Covid restrictions investor trust.

Further relief in stamp duty for non-permanent residents and permanent residents who plan to purchase a second property could also help. The real estate market, they said.

— CNBC’s Monica Pitorelli contributed to this report.

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