Private home prices in Hong Kong fell for the first time in six months due to the ongoing US-China trade war. The prolonged trade war has led to consumers losing confidence in Hong Kong’s real estate market.
Another factor that contributed to the fall in home prices in Hong Kong is the growing social unrest in Hong Kong due to the mass street demonstrations. According to reports, two-month-long Hong Kong protests had an adverse effect on the city’s real estate market in terms of sales and market appeal to investors.
However, according to some realtors, protests will have only a short-term impact on the housing market, which will be supported by increased demand, scarcity of land and expectations to lower interest rates.
According to Denis Ma, head of research at Jones Lang LaSalle, due to the economic uncertainty of the two nation’s ongoing tariff battle, Hong Kong’s commercial and office leasing market is seeing a slowdown in Chinese demand.
Prices for private homes in Hong Kong dropped 0.8 percent in June month-on-month. Also, residential sales volume plunged 43.6 percent in June to a four-month low.
“Judging from the recent social movement and market condition, the price index is within expectation. The index may further correct downward in the next one, two months,” Thomas Lam, executive director of Knight Frank told the media.
He expects another 5 percent drop in the second half.
According to the transport and housing bureau, with 10,000 unsold homes at the end of the second quarter, Hong Kong’s unsold residential property soared to its highest in more than a decade.
Over the past decade, low interest rates, limited housing supply and huge investments from Chinese buyers have pushed housing up more than 200 percent in Hong Kong.
Earlier in July, it was reported that many potential buyers have backed out from deals to buy homes with an estimated worth of $8.9 million.
According to reports, the number of deals fell from 35 major private estates to 23 per week in Hong Kong.