Posted on 03 October, 2019 | By Property852
Hong Kong apartments have recently seen the sharpest fall in prices this year. The most expensive Real Estate market in the world has been on the downturn ever since the indications of a China-US trade confrontation were confirmed. The social unrest triggered by the trade war and flamed by the social media movement has added fuel to the reduction in valuation of the property market.
The price index for lived-in homes diminished to 389.8 after a substantial decrease by 1.4% in August. This was the third successive monthly fall as indicated by official data from the department of Rating and Valuation. According to the SCMP, the research head of Ricacorp Properties, Derek Chan stated that the price corrections are due to a negative feeling among the property owners and builders.
The general market trend is indicative of the persisting negative emotions among the buyers that the trade war between the giant economies may lead to a slump in the Chinese stocks. The temporary ceasefires haven't had any positive impact on the situation. Chan further observed that the drop in August was the largest after last December's 2% reduction. The Hong Kong Monetary Authority indicated that there has been a sharp decrease in the mortgage applications received as well as approved loans. As compared to July, the two figures have reduced by 26.5% and 2.8% respectively.
Chan further added that there's no possible relief in sight too; September is likely to witness perhaps another fall of almost 2% in the market index. He blamed the political uncertainties for the predicted fall.
Chan mentioned that the reduced sales in Kai Tak on weekend meant that less than 50% of the newly constructed Hong Kong apartments could find buyers. This lead to increasing pressure on the project developers to bring down the prices of Hong Kong apartments. This will entail further lowering if prices in the secondary housing market. The Kai Tak project is the third project to suffer such huge losses this year, which clearly indicates weak market confidence.
This is the first time after January that the rents have fallen, dropping to HK$37.46 per square foot. Ricacorp the premier agency tracking 50 estates reported a drop of 1.2% in the rental price of Hong Kong apartments.
A clear relation between the plunging prices and the ongoing protests can be established from the fact that the reduction is happening only in localities where the demonstrations are persistent. The biggest impact has been seen at Tai Wai where there has been a decrease of 8.3% and Lake Silver, which witnessed a 6.2% reduction.
On the other hand, there are places like Leo King Wan where the values have risen by 8.9% to reach HK$41.9 per square foot. Similarly, San Po Kong also saw a rise by 6.9% to HK$36.7 per square foot.
In such a politically unstable scenario, it's difficult to see a stability in the Hong Kong Real Estate Market in the near future. However, if the US and the China can reach an amicable agreement and the social pressure is eased, the price correction will most probably get stalled.
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