The total number of transactions in 2022 is significantly lower than 2021 by more than 40%, a record low since 1996, accumulating a large amount of purchasing power, which can be released at any time once the property market starts to re-activate this potential purchasing power.
Although Hong Kong property prices fell nearly 15% in 2022, but the decline has slowed down since mid-November last year, and recent transactions have seen a rebound.
Referring to the leading indicator "Midland Confidence Index", the index has increased for six consecutive weeks, the latest 61.8 points, from a low of 28.3 points in mid-November has risen 190%, reflecting a significant increase in property owner confidence.
The Midland Confidence Index reflects the weekly price changes in the US online market, with the highest index being 100 and the lowest being 0. The higher the value, the less owners are reducing their prices.
Factors such as the government's relaxation of the epidemic and social distance measures, the imminent customs clearance between China and Hong Kong, and the slowdown of US interest rate hikes may increase owners' confidence and reduce the number of price reductions.
The "Midland Confidence Index" helps predict the trend of property prices.
From 2018 to date, the USL Property Price Index has bottomed out three times in January 2019, April 2020 and January 2021 respectively, before rebounding by more than 4%.
Each time before the bottoming out of the USL Property Price Index, the USL Confidence Index bottomed out one to two months earlier than the USL Property Price Index (in November 2018, March 2020 and December 2020 respectively).
This shows that the confidence index can be used as a reference indicator to predict the turn of the property price index.
At present, the United States Confidence Index has nearly doubled from the lowest level of 28.3 points in mid-November, and rose through the average, and has been rising for six weeks in a row, so there is a good chance that property prices will turn down to rise in the short term, and even have a good rate of increase.
The SAR government has announced a number of relaxation of epidemic prevention arrangements, including the abolition of "vaccination permits" and quarantine orders, and no longer define "close contacts", as well as the withdrawal of most social distance measures.
The government's repeated relaxation of epidemic prevention measures in the short term is tantamount to announcing that Hong Kong has "returned to normalcy", which will help accelerate further integration with the rest of the world and catch up with the pace of global development.
With the imminent customs clearance between China and Hong Kong, it is believed that a large number of mainland tourists will be attracted to visit Hong Kong during the Chinese New Year, which will stimulate the property market to have a "great spring", and it is expected that the first and second-hand transactions will rise together in the first quarter, and property prices will stabilize or even rebound strongly.
With the continuous emergence of good news, the confidence of the owners is being restored, individual owners have even begun to counter-offer, full of street "bamboo shoots" situation is no longer.
