Hong Kong Wen Wei Po (By Liang Yueqin)
Hong Kong property prices have fallen by nearly 10% from a high level in the past six months, being affected by the slowdown of global economic and the Sino-US trade war, and leading real estate agent Cheung Kong also expected the property market in down trend, following the International Monetary Fund (IMF) and so on who look down Hong Kong property market. It is difficult for China and the United States to resolve the deep trade conflicts in short term, and property prices will have another 10% drop this year, also the number of negative assets will gradually increase under the uncertain economic outlook, the Executive Director of Cheung Kong, Cheung Kwok-hung pointed yesterday. He also believed that citizens can only afford the property prices which will fall back to the level of 2016. According to the index of Rating and Valuation Department (RVD), property prices need to fall 24% more to reach the level of 2016.
The appear of boom market recently was mainly due to the downward trend of the property market in the third quarter of last year, while the recent pricing of new projects was lower than that in middle of last year, which began to meet the afford ability of Hong Kong citizens, so the trading is warming up, Cheung Kwok-hung pointed yesterday when was attending Cheung Kong Spring Festival Greeting Meeting.
Asked when the property prices will rise, he smiled and said: "It is not fortune-telling, we don't know when it will rise. At present, the property market has unclear concerns. The Sino-US trade deep conflicts will not be resolved in short term, also the Hong Kong economy has its rule. It is hoped that the Sino-US trade war will be able to make success progress. It is believed property prices will fall this year by another 10% under the uncertain economic outlook. "
Tiny house will not popular again, price of which will drop 30% at any time.
Hong Kong property prices have fallen by about 10% since the peak in August last year, but they are still only returning to the level of early 2018, which in fact are still high, and property prices in 2017 particularly rose quite sharply in more than 14% a year, he also believed.
Property prices should fall to level in 2016 which will be reasonable and meet the citizens’ afford ability, he considered.
According to the index of Rating and Valuation Department (RVD), property prices need to fall 24% more to reach the level of 2016.
At the end of last year, Cheung Kwok-hung had estimated that Hong Kong property prices would fall by 20% at the most, especially looked down the tiny houses market, and they expected that the price of such units will drop by 30%. The supply of tiny houses began to decrease, reflecting developers are turning cautious on such market prospects, he pointed at that time.
"Breath plan" pushes up the rising of negative assets.
For the appearance of negative assets again in the previous quarter, the negative assets will gradually increase, because many developers of new projects in the past few years have provided the so-called "breath plan", that is, buyers can apply for the first and secondary mortgage from developers without income investigation, Cheung Kwok-hung believed yesterday. The percentage of such mortgages was as high as 85% to 95%, so small owners may possible to become negative assets if property prices fall by more than 10% to 15% , but it is believed may not up to the high level of more than 100,000 negative assets in 2003.
Cheung Kwok-hung also supports the government's efforts to maintain the stability of the financial system in Hong Kong and should not rashly relax measures such as the percentage of mortgages, so as to prevent the small citizens and the government from encountering risks when the property market sharply down.
IMF and Financial Management Bureau also worry property market in sharply down trend.
In fact, the IMF had issued an early warning to the Hong Kong property market last month. The IMF expected Hong Kong economic growth to slow to 2.9% this year, compared with an estimated 3.5% last year. At the same time, it also pointed out that Hong Kong risk balance has turned to a downside. The risk is due to the further increase in Sino-US trade friction, the possible collapse of global financial conditions, the slower-than-expected economic growth in Mainland China, and the rapid adjustment of the property market. These shocks are likely to be interrelated and will have more serious impact if they occur at the same time.
The investment environment this year is likely to be as complex as last year, and the tense Sino-US trade relations will continue to plague the global economy and the market, the Governor of the HKMA, Chen Delin expressed couple days before. Once the British government “brexit strongly”, it will have an impact on European macroeconomic and financial markets. The direction of the US economy and monetary policy are unclear, and the market is increasingly worried that the US economy is beginning to slow down, also emerging economies including China are facing the increasing risk of economic downturn, all factors of above will bring large uncertainty and worry to the global macro economy and asset markets.
Hong Kong interest rate has obviously increased as the 9th US interest rate hike, it is believed that Hong Kong interest rate will continue to follow the US in upward adjustment, plus with fluctuations in global market conditions, so investors should do risk management, Chen Delin also said.