The suppressed property market surge

property market surge

Every year, whether the real estate market will experience a small surge after the Chinese New Year holiday is a hot topic that attracts attention from analysts and buyers alike. People like seeing a hike in property sales because it sends a positive indication about the market prospect for the whole year. This February, both the housing and stock markets were doing great, and everyone thought there’d be a huge chance for a post-CNY surge. However, tremendous stock fluctuations soon followed, sending Hong Kong stocks into a 3,000-point plunge. In addition, U.S. President Donald Trump doubled down on trade protectionism by introducing new tariffs. Due to a combination of financial and political reasons, Hong Kong property sales started to slow down before CNY, and the small surge that everyone had hoped for didn’t happen in March. 

According to some client-facing colleagues, there is still a significant amount of interest from home seekers, however, their budget is more conservative than before. On the other hand, the limited supply of second-hand offerings and legions of prospective buyers meant home owners are reluctant to budge on the price, only selling their homes for top dollar. The result is a standoff between sellers and buyers, and a continuously stagnant secondary market.

In the primary market, most new developments have already sold majority of their units, with only a few units available. In early March, sales for a large development in Tseung Kwan O started—the first in a long while. A total of 750 units were sold in merely two days, setting a sales record since the implementation of new first-hand property sales regulations. Yet, there is a substantial number of buyers in the market who can’t seem to find a home, which means that despite the absence of the post-CNY sales surge this year, the market demand remains high. After a period of great uncertainty, the stock market appears to have calmed down. Meanwhile, Trump’s trade protectionism is still more of a slogan than actual policy for now, and therefore is unlikely to have a substantial impact on the real estate market in the near future.

Comparing to stocks and U.S. foreign policies, Hong Kong’s property market is more likely to be affected by the city’s own economic development and political climate. During the 2018 China's National People's Congress, an amendment to the Constitution to abolish the term limit on presidency was approved, which will enable President Xi to carry out social reforms more effectively. It is an indisputable fact that Hong Kong’s future is increasingly interlinked with that of China, which means that we can benefit greatly from China's rise. In other words, China’s stability and economic growth is a deciding factor in Hong Kong’s economic future.

The first round of the 2018 LegCo by-election has just concluded, with the pan-democrats and the pro-establishment each winning two seats. The narrowing gap between the pro-establishment and the pan-democrats shows that politicising issues has become a less effective tool in rallying the electorate. In order to win back more votes, the pan-democrats have to come up with a strategy to elevate people’s quality of life and to deliver real results. By focusing on improving the economy and pushing Hong Kong forward, we can provide hope and opportunity for our youths, and create a better sense of pride and belonging in the Hong Kong people. Although the sales surge didn’t happen, I remain optimistic about the 2018 housing market.  

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