Cross-media property platform (‘Squarefoot’), operated by the REA Group Limited (ASX:REA), today announced the results of its 2019 H2 Hong Kong Real Estate Market Outlook Survey.

Hong Kong property prices predicted to go down, finds Squarefoot survey. In the middle, Kenneth Kent, General Manager, REA Group Hong Kong.

The results of the survey by Squarefoot, a market leader in providing diverse property information about Hong Kong and international markets, reveal a negative shift in public perception towards the local real estate market. More than half of respondents (56%) believe local property prices will go down in the upcoming six months when surveyed, compared to the 8% who thought prices would fall in the previous half-yearly survey.

Among those who expect local property prices to drop, 85% think homes in the New Territories will be hit by a decline in prices. This percentage is noticeably higher than those who think home prices will trend down in Kowloon (71%) and on Hong Kong Island (66%). Looking at the specific districts in Hong Kong, rather than its regions, Yuen Long (68%) is considered by the most respondents to be facing a drop in residential property value, followed by Tuen Mun (57%), Wan Chai (57%) and Shatin (56%).

Such a drop in sentiment may have exacerbated a diminished appetite among local homebuyers, with only 19% saying they intend to buy local property in the next year. Commenting on the generally lukewarm attitude of local homebuyers, Kenneth Kent, General Manager, REA Group Hong Kong, said, ‘The survey was conducted in October when local social events were intensifying. The results reflect a stronger wait-and-see sentiment as the general public adopts an increasingly bleak view of the property market outlook in Hong Kong, amid an uncertain global and domestic environment.’

‘Despite a broad downward adjustment of expectations, there is still strong housing demand locally and Hongkongers are eagerly embracing the use of online property platforms and multiple channels to find property. Squarefoot data for November 2019 shows that our monthly active users have increased by 61% since May. Meanwhile, in November, the number of enquiries about properties listed for rent exceeded the number of enquiries about listings for purchase by 31%, signalling that some prospective homebuyers might be turning to the rental market as they hold off from longer-term commitment,’ Kent continued. In line with previous surveys, homebuyers considered proximity to the local rail network as one of the top criteria when deciding where to purchase their first property.

While local home price expectations have turned negative, the desire among respondents to purchase overseas properties over the next 12 months has remained stable, with 12% citing their intention to do so. Investors who are interested in buying homes overseas are also increasingly considering moving out of Hong Kong. For the first time since 2018 H1, the top three triggers for respondents’ next overseas property purchase included ‘plan for moving out of Hong Kong’ (36%, vs. 17% in 2019 H1), just below ‘good investment value’ (44%) and ‘property prices in Hong Kong are too high’ (38%).

Anita Wong, Head of Consumer Insights, Nielsen, stated, ‘Squarefoot has been conducting this survey since 2012 on a bi-annual basis. This is the fourth time Nielsen have cooperated with Squarefoot and we have enjoyed the partnership. Over the past years the survey findings have proven to be indicative of the general public’s sentiment and confidence in the local property market. The fieldwork of this 2019 H2 survey was conducted during the ongoing social unrest which might have contributed to the increase in intention of property purchase outside Hong Kong, and it is worth noting the difference between the locations considered by investors and locations preferred by homebuyers that are actually considering moving out of the city.’

According to the survey, Mainland China is still the most chosen destination for investment properties outside Hong Kong, whereas Australia, Canada and Taiwan are the preferences for those planning to move out of the city.

The survey also sought to gauge respondents’ views regarding local housing policies and initiatives. The results show that almost half of respondents think there are inadequate choices of mortgage plans available in the market for first-time buyers. This limitation, along with affordability issues, might contribute to respondents’ ever-shrinking expectations about the size of their first flat, with average expectations now standing at 470 sq. ft, down from 515 sq. ft in 2018 H1. However, when asked about their perceptions of a reasonable flat size for a family of four, respondents think 660 sq. ft is the minimum.

According to respondents, the most important measures to support the younger generation to purchase property in Hong Kong are ‘expanding the supply of housing with more discounts’, ‘re-instating the first-time buyer loan’ and ‘releasing income restrictions’.

The online survey was conducted between 2 and 14 October 2019 and involved 1,000 respondents.

About the survey (Squarefoot) commissioned leading global research company Nielsen to conduct the 2019 H2 Hong Kong Real Estate Market Outlook Survey. Feedback was collected from 1,000 respondents aged 18 to 65 through an online questionnaire during the fieldwork period of 2-14 October 2019. The survey is carried out on a bi-annual basis to understand the perceptions of the Hong Kong public towards the local and overseas property markets and explore their purchasing behaviour.

About (Squarefoot) is a leading cross-media property platform in Hong Kong that was created to address local property buyers’ needs for diverse information on the Hong Kong and international markets. Squarefoot provides years of insight and experience in the Hong Kong property market, in addition to the strength of the REA Group, a global leader in property, to provide the best customer experiences.