In response to the interest rate hike cycle has not yet stopped, economic growth slowdown and financial market weakness and other factors, the bank comprehensively lowered the price, volume and amount of property market forecast for the year, the annual property price increase from up to 15% to 5%, the second-hand downward revision of a greater extent than the first-hand.
In terms of volume, the bank forecasts that there will be only about 14,000 new property transactions and 40,000 secondary property transactions for the whole year, a downward revision of about 12.5% and 20% respectively compared with the forecasts made at the beginning of the year; in terms of value, it forecasts that there will be about $156 billion of new property transactions and $305 billion of secondary property transactions for the whole year, a downward revision of about 17.9% and 25.6% respectively compared with the original forecasts. Property prices have also been revised down from the original estimate of a 10% to 15% rise to a mere 5%, with the peak of this year's property prices having occurred in the first half of the year.
Mr Bo pointed out that the recovery of the property market has been weaker than expected, with prices and volumes taking a sharp turn for the worse recently. According to the Midland Property Price Index, property prices rose by about 6.3% in the first four months, but since May property prices have fallen back, dropping by 2.36% as of 7 August, and the rate of increase so far in 2023 has narrowed to 3.8%.
In the first seven months of this year, only 6,843 new property transactions were recorded, involving about $76.2 billion, which is the second lowest record in the same period of 10 years. During the same period, the secondary market recorded 24,400 transactions, the third lowest in the same period in the past 10 years, and the capital involved was about $186 billion, the lowest in the past six years. The second-hand market is currently in a wait-and-see mood, and although the bargaining space for owners has reached 5% recently, it is believed that they still need to widen the bargaining range, or be more flexible in adjusting the transaction period and refurbishing their properties, in order to attract buyers.
Midland's chief property analyst Lau Ka Fai pointed out that the government's stimulus of relaxing the loan-to-value ratio again is far weaker than before. According to Midland branches' records, the transaction volume of 35 housing estates in the month after the announcement of the 2022 Fiscal PLAN was about 18.4 per cent higher than that in the month before the announcement. On the contrary, in the month after the announcement of the relaxation of the loan-to-value ratio last month, the transaction volume of the 35 housing estates did not see any increase, but fell by about 13.9%. It is worth noting that the number of transactions of the 35 estates in the past month was only 149, compared with 296 in the month after the announcement of the "Financial Secretary PLAN" last year, a significant reduction of half.
Lau Ka Fai also pointed out that, recently, new flats have been sold at low market prices, and the first-hand price has been "discounted" in the third quarter of last year, and the average range of the second quarter of this year is between -1.2% and -2.9%; with the discounted price of new flats, the premium of new flats even dropped to -6.7% in July this year. Coupled with the recent shocking prices of new flats in Yau Tong, it is expected that the premium for new flats in the third quarter will have a chance to widen to -10%, by which time the discounted price of new flats will be the highest in a quarter since records began.
According to Bo Siu-ming, the enthusiastic market response to the "big discount" of new flats in Yau Tong reflects the existence of purchasing power, but buyers are only aiming at "new flats" to enter the market; once the "new flats" are digested by the market, buyers will continue to wait and see. With the uncertainty of the interest rate trend, the "price war" of new flats will continue. It is estimated that the discounted price of new flats in the second half of the year will be more than 10%, which is expected to help the property market to "find the bottom" faster and "blow up" the market, and stimulate the buyers to come forward and return to other new flats or the second-hand market, thus speeding up the recovery of the property market.
Bo Siu-ming disclosed that the bank is still recruiting manpower, the first half of the new nearly 700 people, but the shop will be more conservative, the first half of the year has given up renewing the lease of nearly 20 shops. However, part of the "leading position", competitive strategic positions, as long as the rent is reasonable, the bank will rent, this year has been newly leased 5, 6 shops.
In addition, Mr Bo pointed out that the government is actively seeking talents by proposing to exempt foreigners from paying the 30% tax for first-time buyers in Hong Kong, so that they can buy a property and take root in Hong Kong without having to pay high rents.
