Will Hong Kong's property market turn 180 degrees from its record breaking climb this 2016; Bloomberg reports.
A report was released by Knight Frank LLP,Tuesday, focusing on 10 global cities and forecasting Hong Kong to take over Singapore's spot as the weakest-performing luxury residential market this year, with an estimated drop on prime property prices by 5 percent. Hong Kong, Singapore and Paris, based on the report, are the three out of the ten analyzed that are likely to experience price declines this 2016.
"A number of new developments are due to come to the market in 2016," according to the report. "This new supply coupled with a strengthening HK Dollar (pegged to the US Dollar) will see prime prices soften."
For analysts, the recent sluggish trend in Hong Kong's property market may signal a halt to the 12-year really in prices. In the most recent quarter, there was a drop of 6.9 percent on Hong Kong's secondary residential prices, the biggest drop recorded in seven years, based on Centraline Property Agency Ltd. data. Home sales were less than impressive in December, slumping HK$29.8 billion ($3.8 billion) from the same time a year before, in a data by Hong Kong Land Registry.
However, analysts from Morgan Stanley beg to contradict the forecast on Hong Kong's property market, expecting that prices could go 5 percent higher based on strong demographics, low unemployment and a stable mortgage rate.
Knight Frank is sticking to their predictions of the Hong Kong and Singapore markets though; citing higher U.S. interest rates and sluggish growth in China as factors. While Singapore is expected to see a drop of 3.3 percent in luxury home prices, Sydney keeps its spot as the best-performing market with 10 percent gain, according to the Knight Frank report.
It's the same prediction for property adviser Colliers International Group Inc., as they see Hong Kong home prices dropping 15 percent this 2016. With the growing inventory - expected to increase by 70,000 to 80,000 units in the next three to four years - developers may need to reconsider avoiding price cut, says CBRE Group Inc.
