It is expected the rent will decline in the first quarter, while it may be stable in the second half year.
The completion of new projects in last year had already reached more than 20,000 units, and it is estimated that there will be much the same in this year. The completion of this year may be close to the level of 20,000 units, thereinto Kai Tak, Tseung Kwan O, Pak Shek Kiu of Tai Po and Tuen Mun have the most, according to industry’s initially estimation. The industry believed the rent will decline since a large number of new projects have been completed in the past two years, and it will continue to fall by 2.5% in the first quarter as most of them are completed in recent months plus with the market trend is uncertain, while it will possible be stable in the second half year due to the external economic events.
(By Yan Lunle)
The Government has indicated earlier that it would gradually reduce the supply of private housing, and change the ratio of public to private housing from previous 6:4 into 7:3. Many commentators believed that the reduction in supply will inevitably push up the price of private housing or rent, etc., but what must be noted is the amount of housing construction in the past three years had remained at a high level. New houses under construction are 18,400 units in 2018, 17,000 units in 2017 and 25,500 units in 2016, in other words, the average was 20,300 units per year, and there will be nearly 20,000 units per year in average finished in future base on the construction period in about 3-4 years, so the impact on rents is noteworthy, according to the data from the Transport Bureau,
More than 3,000 units in Pak Shek Kok and Tseung Kwan O are being completed respectively.
There will be nearly 20,000 units completed this year according to the industry's forecast. Hong Kong Wen Wei Po predicted the completion volumes in four districts including Kai Tak, Tseung Kwan O, Pak Shek Kiu in Tai Po and Tuen Mun will be the most, Tseung Kwan O and Pak Shek Kok in Tai Po among rank the top two, which are 3,772 units completed from MALIBU, WINGS AT SEA and WINGS AT SEA II in Tseung Kwan O and up to 3,233 units from St. Martin, Solaria, and The Horizon in Pak Shek Kok of Tai Po.
The rent in the districts having more completion volume of new houses will be challenged, the Head of the Research Department of Ricacorp, Chen Haichao pointed. Such as Tseung Kwan O, it is expected to have several new projects completed within a short period of time this year, with the number over a thousand in each project, leading nearly one thousand units available for rent assuming that 20%-30% of them are used for rent, so the rent will inevitably be lowered if owners want to rent out earlier under pressure from there are plenty choices for tenant.
The rent in overall year estimated to decline by 2%.
The rent trend in this overall year will be "first fall and then rebound", and it will continue to fall by 2.5% in the first quarter following by the 3% of decline in the fourth quarter in last year, because it is the traditional dull season plus the rent is suppressed by the downturn leading market as the completion volume is rising, but in the mid-year of hot rental season, the rental market is expected to have a turnaround in response to the increase in tenant demand, then in the second half of the year, the rental trend will be able to make a smooth transition, he predicted.
However, some of the regions with more supply, due to oversupply, the rents in this year may lag behind the leading market, with a decline of 2% in the whole year, which will not rise again until the impact from new projects completion disappears.
Both supply and demand have risen in the market recently, and many homeowners change into renting because of the property market downturn, however, at the same time, buyers also turn to renting market waiting for property prices to fall or government HOS housing, which offset the effects from each other, leading the decline in rents to be relatively smaller compared with the decline in property prices, industry insiders pointed. Despite this, the decline of rent in some areas with supply rising sharply is unavoidable, due to the effect of competition.
