The epidemic hits the economy. Survey: Citizens wait and see the property market trend.
To alleviate the economic impact of the COVID-19 epidemic, the Fed suddenly cuts interest rates by 0.5%, the first time since the financial tsunami in 2008. Hong Kong also faces the effects of the epidemic and violent demonstrations in the past half-year. And the economy is declining. However, Hong Kong banks did not follow the US to cut interest rates yesterday. A survey conducted by Hong Kong Property Services yesterday showed that nearly 60% of the respondents believe that the Hong Kong Banks will cut interest rates in the next 12 months. Although the low-interest-rate environment is expected to continue, the public still wait-and-see the property market outlook. The proportions of citizens' increase and decrease intentions to enter the market are similar after the US interest rates cut, with 36.5% of the respondents expressing increase, and 36.2% of the respondents expressing decrease.
Hong Kong Wen Wei Po Journalist (Choi King-Man)
To understand the citizens' latest interest in buying homes after the Fed interest rate cuts, Hong Kong Property surveyed "Housing Intentions after US Sudden Interest Rate Cut" in a questionnaire form yesterday. It successfully recovered a total of 337 valid questionnaires. The survey finds out that 56.7% of the respondents believe that local banks would cut interest rates in the next 12 months, and the respondents consider the interest rates unchanged or raise account for 21.7%, respectively, reflecting that citizens have high expectations of local interest rate cut.
The proportions of citizens' increase and decrease intentions to enter the market are similar.
As for the publics' intention to enter the market after the US interest rate cut, 36.5% of the respondents expressed an increase, and 36.2% expressed a decrease, while 27.3% believed no change. These reflect that the citizens' intention to enter the market after the US interest rate cut slightly increased, but quite a few citizens still wait-and-see, waiting for further adjustments in property prices before house purchasing.
Lee Chi-Shing, the Chief Executive Officer of Hong Kong Property, yesterday expressed that the speed and rate of US interest rate cut exceeded expectations. At the same time, there is limited space for local banks to follow the interest rate cut, and some large banks do not follow the pace of interest rate cut. The Prime Rate (P) continues to hover at low levels, and the Hibor is adjusted downwards. It is believed that the overall low-interest-rate environment would continue, which will support the property market. He pointed out that although the interest rate is not the only factor stimulating property prices to rise, the situation of "installment lower than rent" due to the low-interest-rate environment continues. It is still attractive to buyers and believed that funds would continue to flow to the property market.
mReferral: Buyers still wait and see.
Cho Tak-Ming, the Chief Vice President of mReferral Mortgage Brokerage Services, believes that in recent months, Hong Kong has introduced several measures to alleviate the freeze in the property market and assist homebuyers in their relief efforts. They include the introduction of "repayment of interest do not cover the principal" plan, fixed-rate mortgage loans, and other programs. It is believed the measures would help relieve the slack market. However, it is expected that prospective home buyers will remain wait-and-see attitudes under the current epidemic situation. And it is believed that their house purchasing intentions would rise after the epidemic is improved when the trading will rebound.
Knight Frank expects luxury property prices to fall by 10%.
Lam Ho-Man, The Executive Director and Director of the Valuation and Consulting Department of the Knight Frank, points out that Hong Kong's economy is facing a big test due to the impact of the "social movement" and the outbreak of COVID-19 epidemic. He says it will affect wealth accumulation and purchasing power. This company expects both residential transaction volume and property prices to fall in the coming months. It also estimates that the luxury house prices will fall by about 10% all year round. In contrast, the situation for the super-luxury houses will be relatively stable, with a small decrease. Fortunately, the current owners are still powerful, and interest rates are still low, so it is expected that residential property prices will not sharply fall like that during the financial turmoil in 1997 or the SARS outbreak in 2003.