New developments to grab market purchasing power, dragging down the private residential property prices for three consecutive months under pressure, the property price index in July to expand the rate of decline.
Rating and Valuation Department announced yesterday (29th), July private residential property price index at 343.4 points, down 1.12% month-on-month, the index has fallen for three consecutive months cumulative setback of about 3.05%, nearly 8.8% year-on-year, the index to see half a year of new lows, summing up the first seven months of this year, the property price index still recorded a rise of about 2.6%.
With property prices still falling, people would rather rent than buy, and the rent index rose by 1% month-on-month, rising for six consecutive months to a record high since October 2021," said analysts. The analysis pointed out that the economic downturn has aggravated the backlog of new properties, which have been approved for sale, but not yet put up for sale up to 13,500 units, the developers to reduce prices in the second half of the year, such as the Government does not withdraw the spicy, the first half of the property price increase will be evaporated, the annual overall property prices may fall by 5%; the second-hand property prices or fall even more "sweet", the owners need to be split by 5% to 10% of the price to have a deal.
By household type, all private residential property prices recorded a drop. Among them, the biggest drop was recorded in Class E (1,722 sq ft or above) units with fewer than 20 transactions, at 296.2 points, a month-on-month drop of about 1.89 per cent; Class D units (usable area of 1,076 to 1,721 sq ft), at 304.2 points, a month-on-month drop of about 0.29 per cent; Class C units (753 to 1,076 sq ft), at 316.3 points, a month-on-month drop of about 0.19 per cent; and small and medium-sized units. For small and medium-sized flats, Class A flats (431 sq ft or below) were at 374 points, down by about 1.4 per cent month-on-month, while Class B flats (431 to 752 sq ft) were at 333.1 points, down by 1.13 per cent month-on-month.
Rents moved in the opposite direction to property prices, with the private rental index at 183.2 points in July, up by 1.05% month-on-month, rising for the sixth consecutive month and by 4.39% in the first seven months. Rental indices for all types of flats were up across the board, ranging from 0.65% to 1.4%, with Class B flats up 1.4% month-on-month at 181.7 points, the highest rate of increase.
The second largest increase was in Class C at 155.8 points, up 1.3% month-on-month; Class E at 138.4 points, up 1.17% month-on-month; Class D at 152.2 points, up 0.79% month-on-month; and Class A at 202.3 points, up 0.65% month-on-month.
According to the latest market data, there are 13,500 flats that have been approved for sale but have not yet been put up for sale, and the backlog of stock has put pressure on developers to reduce prices when selling their products.
Knight Frank director, head of Greater China research and consulting department Wang Zhaoqi said, developers will increase the second half of the price cuts, if the government does not withdraw spicy, the second half of the overall property prices may fall 5% to 10%, and evaporate the first half of the increase in property prices for the whole year is predicted to be flat to down 5%. Second-hand property price adjustment is even greater, owners may need to split prices by 5% to 10%, resulting in a corresponding increase in the number of cases of erosion.
According to S.K. Wong, the Official Property Price Index (OPPI) reflects the predominantly second-hand property prices, and the OPPI fell by another 1.1% month-on-month in July, with a total drop of 3% in the May-July period. High interest rates, lack of purchasing power and the build-up of new flats continue to push property prices downwards.
In the absence of any favourable news in the market, residential property prices will face strong resistance for the rest of the year and are expected to remain low in the near term.
He believes that the Government's "Quality Migrant Admission Scheme" will bring the labour force back to a rising level, which will provide rigid support for residential rental demand. He believes that residential rents will remain stable for the rest of the year, and expects rents to rise by around 5% this year.
Ricacorp real estate research department director Chan Hoi Chiu said, July property prices fell slightly more than expected, mainly reflecting the lack of confidence of buyers to enter the market, on the one hand, the stock market since this year has continued to be weak, the interest rate trend is not clear, so buyers enter the market to weaken the momentum of second-hand landlords to sell their goods to increase the pressure of price reductions, dragged down property prices to slightly widen the rate of decline.
In terms of rental performance outlook, Chan Hoi-chiu expects that in the traditional summer holiday rental season and the rest of the year professionals continue to come to Hong Kong, the third and fourth quarter rentals can remain strong, it is estimated that the cumulative annual rental increase can reach 8% to 10%, compared with the performance of the property price is strong.
However, Chan Hoi-chiu believes that the fourth quarter has the opportunity to become a turning point for the property market. Firstly, the market expects the Chief Executive's second policy address in late October to relax or adjust the property market's stringent measures in response to the current market conditions, so as to rationalise market transactions and stabilise property prices; in addition, more and more professionals are coming to Hong Kong, and the demand for housing will continue to increase.
If the policy and the demand for professional housing can be matched accordingly, property prices are still expected to turn the corner in the fourth quarter, with a cumulative rebound of 3% to 5%, and property prices for the whole year can still be expected to rise by 4% to 6%.
