RICS-Spacious report indicates continuous decline in prices, sales volumes and rents
CHINA – 19 September 2019 – Amidst trade tensions between China and the U.S., Hong Kong’s political unrest has continued to dampen market sentiment. According to the newly published RICS-Spacious Hong Kong Residential Market Survey, Confidence Index continues to fall from -54 in July to -76 in August.
The survey also indicates that both buyer and rental demands have reported significant deterioration, with rental demand recording its first negative reading in the survey’s history.
During the most intense period of protests, nearly 70% of respondents have cited some degree of price decline over the past three months. Prices, sales volumes and rents are expected to dwindle in the near-term.
Aggregate prices are expected to fall 4.6% across Hong Kong, sales volumes are seen slipping 5.3% and rents 2.5%. The market outlook prediction seems to be a significant reversal since June, where survey contributors anticipated an increase on all three of these metrics.
“Participants also commented that a cessation of the protests appears to be unlikely in the near-term, which contributed to the more subdued medium-term outlook for the market”, said the report’s author Sean Ellison, RICS Senior Economist for Asia-Pacific. Ellison also states that “some survey respondents cited tariff escalation between China and the U.S. as a headwind, the ongoing political unrest continues to be the main catalyst cited as driving market pessimism.”
Although the current market sentiment is similar to when trade tensions escalated and when interest rates were expected to increase in October 2018 and February 2016 reports respectively, a clear resolution to the city’s unrest is proving to be elusive.
The RICS-Spacious Hong Kong Residential Property Monitor is a monthly sentiment index tracking trends in the commercial property market. It is a leading indicator for global investment and occupier markets. The full report is available at www.rics.org/economics.