Tens of Thousands of Jobs Are not Guaranteed; The Housing Market Gets Worse.

28Hse Editor  2019-12-10  #Transaction
46% of citizens had expected property prices to fall, and there was no reflection of further deterioration in November. The property market trend has been uncertain in recent months. The Government announced the relaxation of mortgage insurance in mid-October, which once stimulated the property market to rebound. Citibank ’s survey of citizens’ housing intentions in the fourth quarter of that month showed that citizens’ confidence in the market outlook had slightly recovered, and 46% of citizens had expected property prices to decline in the next year, a sharply 10% decrease from the previous quarter. However, the negative news has been endless after October. Retail Management Association warned yesterday that there would be a wave of layoffs and closings in the next six months, and an estimated 7,000 retail companies will be closed down. The data shows that the trend of property prices is highly correlated with the unemployment rate. Depending on the recent slowdown in first-hand property market sales and dull second-hand property trading, some scholars worry that the unemployment rate may rise to 3.6% in the next half-year, and tens of thousands of jobs will not be guaranteed, also property prices will fall by more than 5% during the period. Journalist: Ngan Lun-lok Citibank yesterday announced the results of a survey of citizens’ housing intentions in the fourth quarter of this year, showing that citizens’ confidence in the market outlook has slightly recovered, and respondents expecting property prices to fall in the next 12 months were 46% which was significantly 10 percentage points lower than that in the previous quarter, while 21% and 32% of the respondents expected it to rise or stabilize, with the percentages rising by 3% and 6% respectively quarter-to-quarter. Although 60% of the respondents still think that it is not a good time to buy a home, the proportion has dropped by 8% compared with the previous quarter. Various signs show that property prices will fall. The Retail Banking Business Director of Citibank, Lee Kwai-chong expressed yesterday that although most respondents believe that property prices will fall in the next one year and current is not an ideal time to buy houses, the percentages are down from the previous quarter, reflecting a decline in the number of pessimistic people in the market. However, some insiders reminded that the relevant investigation was conducted in October when the government announced the relaxation of 80% to 90% of the mortgage insurance plan, while this positive news currently has been overwhelmed by negative news such as the repeated Sino-US trade war, escalated violent demonstrations, continued society turbulence, and rising unemployment rate, etc., which all hit citizens' confidence in entering the market. There are various signs like slowed down recent sales and dull second-hand property trading show the property market is back to a downturn. It is worth noting that there were still 57% of the respondents expressing uninterested / very uninterested in buying property currently although citizens' confidence in the future market had risen slightly in October, and the proportion increased by 6% from the previous quarter. Lee Kwai-chong believes the data reflects that respondents still wait and see the property market outlook under the situation of the outlook is uncertain. The Managing Director of Wang Leung Consulting and Evaluation, Cheong Kiu-chor also expressed that property prices are still at a high level although they have fallen a certain range in the second half of the year, so most prospective buyers in the survey believe that it is not the time to buy houses. 7,000 stores expected to close in the next half year. The Associate Professor of Financial and Decision College at Hong Kong Baptist University (HKBU), Dr.Billy Mak believes that the rising unemployment rate is even more worrying in the future. He points out that the unemployment rate in Hong Kong has recently risen sharply to 3.1%, and the increase in the unemployment rate is gradually expanding based on the average of the past three months. He also cites the latest data from the Retail Management Association to estimate that 7,000 stores will close in the next six months, which means the market may increase tens of thousands of unemployed people assuming that each store has 5 to 10 employees. Dr.Billy Mak estimates that logistics, catering, tourism, and so on will be affected in addition to retail. Under the influence of various industries and chains, it is predicted that the number of unemployed people may increase by at least 20,000 and the unemployment rate may rise sharply to 3.6% in the next six months, and "this estimate is speculated under a situation of no further deterioration of the economy." In the face of the rising unemployment rate, he believes that people of most affected will be graduates next year because companies will adjust employment strategies. The property price trend moves in the opposite direction of the unemployment rate. The data shows that the trend of property prices in Hong Kong is highly correlated with the unemployment rate in a reversed direction, that is, the property prices are high when the unemployment rate is low, and the property prices are low when the unemployment rate is high. Dr.Billy Mak points out that the economic downturn will cause some people who do not have urgent needs or have an unstable income to postpone housing plans, and there will also be individual owners selling properties due to capital flow issues. However, according to the trend of the property market under the worsening Sino-US trade war and social turmoil in the past half-year, it is believed that the possibility of a sharp fall in the property market next year is not large, and the estimated decline range will be similar to that in the second half of this year at about 5%. He explains that the current economic environment is different from the Asian financial turmoil in 1997 and the SARS epidemic in 2003, and powerful home buyers are not the group of most affected by the economic downturn, also there is little room for owners to reduce their prices. In addition, there is a large demand for housing in Hong Kong, and developers are more defensive than in previous economic downturns, which all have reduced the impact of the current recession on property prices.
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