According to reports from Hong Kong media, property prices in Hong Kong have frequently reached new highs, with the Centa-City Leading Index (CCL) rising over 13% in 2017, marking the largest increase in nearly five years.
J.P. Morgan: Hong Kong Real Estate Market Will Rise Another 15% in 2018
J.P. Morgan released a report on the Hong Kong real estate industry, predicting that this year, the prices of second-hand residential properties will rise by another 10% to 15%, especially as the government increases fiscal spending, which will stimulate inflation, leading citizens to hope to "buy property to hedge against inflation." The supply of new developments from developers is also increasing, with an estimated increase of 5% in first-hand property prices.
J.P. Morgan's Managing Director of Asia Pacific Equity Research believes that the supply level of housing in Hong Kong is not an issue, but market expectations for rising property prices have absorbed a large amount of investment demand, making it difficult to predict when the Hong Kong real estate market will peak.
He also stated that the current Special Administrative Region government of Hong Kong is no longer conservative and will increase both long-term and short-term expenditures to narrow the income gap, which will drive inflation and lead citizens to hope to preserve value through property ownership to hedge against rising costs.
Interest Rate Hikes May Not Have a Significant Impact on the Hong Kong Real Estate Market
Regarding the United States entering an interest rate hike cycle, J.P. Morgan analysts have analyzed that property price levels are influenced by real interest rates rather than nominal rates. Although U.S. interest rates are gradually rising, they are offset by inflation, and the situation of negative real interest rates will continue, thus supporting property prices. Since the trend of interest rates is within expectations, the "interest rate monster" may not have a significant impact on the real estate market.
Multiple Real Estate Service Providers Are Optimistic About the Hong Kong Real Estate Market in 2018
In addition to J.P. Morgan's optimism about the Hong Kong real estate market, several real estate service providers are also confident about the market in 2018.
The Vice President of Cushman & Wakefield in Greater China stated that under various favorable factors, property prices in the first half of 2018 are expected to rise by 10%.
The Managing Director of Jones Lang LaSalle also stated that the real estate market continues to record new high transactions, and with many new developments coming to market, the firm expects the luxury property market in 2018 to remain strong, supporting the rise in property prices.
A representative from Midland Realty also anticipates that the "new development dominance" has become a trend, and the purchasing power of the "parent trunk" has not yet bottomed out, estimating that the registration volume of first-hand private residential properties in 2018 will challenge 20,000 units, setting a new high in 14 years, with the registration amount expected to continue to break records, reaching approximately HKD 250 billion.
What are your thoughts on the Hong Kong real estate market in 2018?
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