Strict measures restrain the trading, and the market is lead by users. Also, it is optimistic about the market trend.
Pneumonia epidemic continues to spread in Wuhan, and recent reports point out that cases of infection have also appeared in Hong Kong. Will the epidemic affect the property market? The APAC Vice President and Residential Department President of Centaline Property, Chen Wing-kit points out that it is difficult to estimate the change of the epidemic situation at present. Still, it is believed that the market has a high level of social vigilance under experience of SARS in 2003, and the general public has enhanced the awareness of health. Moreover, there was a strong trend of investment and speculation in 2003 when there were no strict measures in the property market, thus the society stopped, and the property prices dropped sharply after the epidemic broke out. However, at present, the property market is limited by strict measures, mainly of users, so the property prices fluctuation is believed can maintain within 10% even in dangerous situations.
(By Ngan LunLok)
Many factors are influencing the property market this year. Although the market is expected to have a long-term supply gap, more negative factors keep simmering. For example, the property market has fallen back again and again recently affected by the new type of pneumonia. However, Chen Wing-kit is still optimistic when asked about his views on the future market. He expects the property trading will rebound after the lunar New Year, and the transactions will rise first, then followed by the property prices after the cheap houses being sold. The property prices in the first quarter are possible to increase by 2% to 3% and maybe 5% in the first half of the year.
The purchasing power is gradually released, benefiting the leading market.
He explains that the recent signing of a trade agreement between China and the United States and the easing of social movements in Hong Kong have gradually released the accumulated purchasing power in the second half of last year. It is expected that after the lunar New Year, the atmosphere of property trading will increase steadily, with 1800 to 2000 first-hand property transactions under expectation in February. However, he also admits that this forecast based on the fact that the pneumonia epidemic in Wuhan will not deteriorate on a large scale, the low-interest environment will continue, Hong Kong will not invest on a large scale, and Sino US trade relations also social events will improve.
The risk of high percentage mortgage may be higher.
Chen Wing-kit recalls that many economic activities in Hong Kong halted due to the impact of SARS in 2003, and some parts of Hong Kong were even blocked. The situation will not be able to handle if the epidemic affects the operation of the branch. However, he adds that if the property price falls due to this reason, the buyers who bought houses under the relaxation mortgage insurance earlier need not worry about it. In contrast, buyers who chose developers' high percentage mortgage may worry about it since they have not passed the stress test. But he believes that these owners having negative assets or being recovered the difference by the developers are only a few.
He appeals to the Government to speed up the planning of brownfield land.
On the other hand, the lack of land supply in Hong Kong has become an urgent situation. The Executive Director of Centaline Surveyors Limited, Cheong King-tat expresses, the Government’s process on land supply problem in 2019 was slow since the main land supply base has been nearly exhausted. However, some large-scale reclamation projects are not likely to be implemented in the short term. To solve the problem of land supply in the short and medium-term, the Government should accelerate the change and integration of brownfield land and launch the public-private land-sharing plan as soon as possible.
The land shortage in Hong Kong continues to worsen, with private housing land supply plummeting annually by 19% to 11850 units this year, Cheong King-tat says. At the same time, in 2019, the developer's land premium amount was only HKD15.8 billion, down 40% compared with HKD26.15 billion in 2018, and even sharply decreased more than 60% compared with HKD40.03 billion in the peak period in 2017. But in this case, the Government still slows down the land launch, and the private housing land supply next year will fall to 12,900 units in expectation under the condition the public-private ratio of 7:3.
"Turbulence" slows down the demand for private housing.
Although the Government has substantially reduced the supply of land supply for private housing, the imbalance between supply and demand has eased under declined overall demand due to the social unrest in 2019. Also, there are still 93,000 units of potential private housing supply in the next three to four years, so the market has not yet experienced substantial changes, and the private property market will not face the problem of "no house to sell" in the next few years. What the market should pay attention to is the change of land supply in the future.
Cheong King-tat points out that the private housing land reserve was dramatically reduced compared with that a year ago under the condition of "turning private land into public land." And Kai Tak land, which is the principal land supply base has been fully launched in recent years. However, some large-scale reclamation projects such as "Lantau tomorrow" are not likely to be implemented in the short term. To solve the problem of land supply the short and medium-term and avoid the supply gap, we have to accelerate the change and integration of brownfield land and launch the public-private land-sharing plan as soon as possible, which is the only solution.
He also expresses that although there had been some incidents of failure of bid and abandoned transaction when the Government was selling land in 2019, they only limited to commercial land. While the overall atmosphere of residential land sale was stable, and the competition among developers was still fierce. The successful bidding price of individual land was within 10% higher of the second-highest price, reflecting that developers were not in a rush to look down on the future market.
