- Hong Kong citizens continue to see local homes as overpriced and the cooling measures ineffective in stabilising property prices. Housing prices are expected to grow in 2017.
- The majority of respondents are unsatisfied with the housing policy last year and look forward to the new government to stabilise the property market with a new series of measures.
- Land shortage is the key factor for the rise of property prices. Hong Kong citizens expect the next Chief Executive to provide an effective remedy solving this problem. Land development policy will be a major factor affecting the success of Hong Kong housing policy.
- Most of the respondents agree to the change of land use of industrial buildings, warehouses and brownfield sites to increase housing supply. However, opinions diverge on whether building public housing in country park land.
- Property price remains the most crucial consideration in home purchase. First -time buyers are turning to microapartments offered by developers.
- The supply of mid-priced second-hand properties is relatively sufficient, resulting in more room for bargaining and encouraging the transactions of mid-priced second-hand properties.
- Compared to last year’s survey results, the tendency and extent of rent increases are higher.
- Respondents are more interested in purchasing overseas properties. Australian property market is favoured while enthusiasm for Mainland China market has cooled down.
Hong Kong’s number one property platform GoHome.com.hk today announces the results of Hong Kong Property Perspective Survey forecasting into the first half of 2017. Since 2012, Gohome.com.hk has been conducting the Hong Kong Property Market Perspective Survey twice a year to analyse public opinion on Hong Kong’s property market trends. Over 2,800 respondents were interviewed and their responses were evaluated through online questionnaire, the survey has been regarded as a prominent indicator for the market.
1. Hong Kong citizens continue to see local properties as overpriced, way beyond their level of affordability. Generally speaking, respondents don’t find the cooling measures effective in stabilising property prices and expect prices to rise continuously during the first half of 2017.
- Views on property market trends: Nearly 90% (89%) of respondents believe that Hong Kong’s housing market is overpriced. When compared with results from 2013 to 2017, respondents who find property prices unaffordable have increased by 12%. In the first half of 2016, those who expected property prices to edge down outnumbered those who believed it to grow; however, in the second half of last year, the gap had narrowed. According to the survey, over 50% (52%) of respondents say that property prices will continue to grow, which has increased by 16.4% as compared with the last survey (36%). Those who expect an upward trend (52%) have hugely outnumbered those who see property prices dropping (25%). Over 40% of respondents (42%) even expect property prices to increase by 5 to 10%. The promotion of microapartments since 2015 also contributes indirectly to the rise of price per square foot. It is expected that the supply of microapartments will grow in 2017.
- In regard to the government’s cooling measures, over half of the respondents (52%) see the market as overpriced and the government should rein the rise. However, a majority (66%) of respondents convey that the cooling measures have not been effective enough in constraining property prices, nearly 80% (78%) of them strongly believe that the new cooling measures cannot stabilise property prices because the government fail to tackle the problem of land shortage, population rise and hot money from China. On the other hand, about 70% of respondents (68%) find the cooling measures responsible for boosting property and rental prices. According to the survey, most people believe that property prices will continue to increase despite the new cooling measures.
- In retrospect, most respondents feel that the government’s housing policies in 2016 has failed to regulate market prices, while nearly 80% of them (78%) commented that the new cooling measures has not resolved the fundamental issues of the property market. Those unsatisfied with the housing policies of Chief Executive CY Leung outnumbered those who found them satisfactory. 16% of respondents rated his performance as 0 (very poor). Respondents hope that the new government in 2017 will stabilise the housing market with a new series of policies. Nearly 70% of them (69%) agree to making adjustments to the cooling measures: the allowed period for “one-for-one” property exchange should be extended from 6 months to 1 year; 70% support vacant property tax; 74% of respondents strongly agree the offering of various zero-interest home ownership schemes for first-time home buyers; nearly 70% (68%) support a ban on non-resident property purchase.
- Most respondents agree to the development of brownfield for residential use (75%) and the amendment of town planning policies to allow for the change of use of industrial buildings and warehouses to residential units (76%). Over half of them (53%) oppose to developing country park land. Citizens have reservation towards any land development plan that would have a negative impact on the preservation of the ecosystem and environment. Respondents believe that the next Chief Executive should focus on the increase of housing supply, land planning and development.
- In regard to RMB depreciation, 45% believe that it will cause property prices to rise while 33% believe that the price level will drop as a result. Only 22% believe that the market will not be affected, reflecting that the China factor remains strong in Hong Kong property market. As many as 65% express various levels of concerns towards the expiry of deeds by 2047, affecting their interest in property purchase.
2. Primary market and developers: Price remains the most critical consideration for property buyers. Valuation of HOS units is too high, while developers tend to attract buyers with additional offerings on first-hand homes, contributing to the domination of first-hand private properties in the market.
- Over 70% (73%) of respondents express their desire to purchase a home, recording a 7% drop compare with the last survey. 44% will consider buying a home after 2 years while 36% of them will consider doing so within 1 to 2 years. 45% will target properties priced between HK$3-5 million, and 16.1% those below HK$3 million.
- Among those interested in the primary market, 34% of them express that they are attracted by the special offers and discounts provided by developers, reflecting that price remains the most crucial factor of consideration. 90% find cash rebate the most attractive option while 91% prefer a price cut. Others (24.8%) are inclined to the primary market because of its favourable investment value.
- HKMC offers mortgage insurance schemes for home starters with a higher proportion of mortgage. Meanwhile, developers are offering different types of mortgage loans, special offers and discounts for first-time buyers, attracting them to opt for the primary market. Looking into the future, without many changes in the cooling measures and mortgage loans factors, starter homes in the primary market will continue to drive market transaction and starters will also see it as their top priority.
- The survey on microapartments in 2015 H2 revealed that 71% of respondents were unwilling to purchase a microapartment even if they could afford it. Nevertheless, in the recent survey, respondents resisting to purchase a microapartment have dropped to 62%, while 20% and 18% of them express their willingness to buy for investment or self-use.The findings indicate that property price remains the most critical consideration of buyers. Buyers are inclined to starter homes with lower entry costs, and first-time buyers now turn to microapartments offered by developers.
- With increasing demand of first-hand residential properties, citizens will end up losing confidence in government’s housing policies. The next Chief Executive should respond to citizens’ appeals, and address policies to control the ration of public and private housing demand to protect the interests of society as a whole. Government should also stop first-hand home prices from soaring and to resolve the imbalance in the supplies of primary and secondary property market.
3. Secondary market and the adjustment in rent: Sufficient supply of mid-priced units and increase in bargaining power encourage the transaction of second-hand mid-priced properties. The tendency and extent of rental increase have risen.
- Over 80% (82%) of respondents express that they will not consider selling their properties in the coming 6 months, while 17% claim they will consider, which shows a 5% increase from the last survey. 44% of them will target properties between HK$5-10 million while 31% will look for options at HK$3-5 million. A mere 13% will target properties below HK$ 3 million, reflecting a high supply in mid-priced secondary market. Most landlords (41%) will accept a bargain of 10%, a 4% increase from the last survey. Coming in second are those accepting no bargain (38%), which has dropped by 6% from the last survey. Buyers interested in starter homes below HK$3 million have dropped from 27% to 16%, while those eyeing for HK$5-10 million property have increased from 23% to 33%. Purchasing power of mid-priced flats is increasing, together with a sufficient supply and increased bargaining power, transactions in the secondary market are expected to rise.
- Most landlords (74%) are expected to increase rent during the first 6 months of 2017, 29% will increase by 5% of below, while 30% will increase by 6 to 10%. Comparing with the last 2 surveys, the number of landlords expecting to increase rent has increased by 43%, while tenants paying rent in the range of HK$15,001-20,000 have increased by 6% (20%) and those paying less than HK$10,000 have dropped to 34%. The results reflect that the overall rental level is climbing up, especially within the range of HK$ 15,001-20,000. The tendency and extent of rent increases are expected to rise.
4. Hong Kong buyers show growing interest in overseas property market with Australia becoming a hotspot.
- The US market has always been a property hotspot. Since Donald Trump assumed presidency, 75% of respondents believe that Hong Kong will speed up in the raising of interest rate, thus increasing the burdens of repayment instalment. 84% of them said that they would not consider buying properties in the US.
- About 20% of respondents (17%) show interest in overseas properties, which increased by 4% when compared with the last survey (13%). The majority of them (54%) will consider purchasing Mainland or overseas properties below HK$3 million, recording a 16% drop from the last survey. However, those opting for flats between HK$3-5 million (27%) and HK$5-10 million (16%) increased by 9% and 8% respectively. Potential investment return of overseas properties (46%) remains the major consideration of respondents, while 37% of them show the desire to migrate or retire to the location. Taking advantage of the robust US dollar, an increased number of respondents aim to profit from the exchange rate difference due to the depreciation of many currencies. In general, both interest in overseas property market and respective investment budget have slightly increased. We believe that investors are looking for a new way out in light of the cooling measures at the end of last year. Overseas property market shall remain the place to look for in 2017.
- The Australian and British markets have always been popular among Hong Kong buyers. In the recent survey, Australian property market has become No.1 in terms of investment value. 33% of respondents have shown interest in making purchases there, while the traditionally popular Mainland market (29%) has dropped to No.2, ranking the same as the UK. Japan (25%) ranks third in this year’s survey.
- According to the findings, respondents interested in the Mainland market have dropped by 6%. The slowing down of China’s economic growth and the depreciation of RMB have caused the potential value of Chinese properties to decrease, thus also the interest in purchasing. The rising demand for Australian properties and the expected interest cut of Central Bank in Australia both stimulated the rise of property prices. We believe that Australia will remain a popular destination in overseas properties.
Ms. Carrie Law, Regional General Manager of iProperty Group (Hong Kong & Macau) stated that, “Since 2012, Gohome.com.hk has been conducting the Hong Kong Property Market Perspective Survey twice a year to analyse public opinion on Hong Kong’s property market trends and housing policies. The results have long been well received and highly regarded by industry players in Hong Kong. Findings in this survey reflect that respondents are unsatisfied with the cooling measures in curbing property price rise; the market is expected to go upward in the near future. People are looking forward to the new government to stabilise Hong Kong property market with a series of new policies. On the other hand, developers will continue to provide special offers and discount for home starters, pushing the property plot to be dominated by primary market. In terms of the secondary market, the sufficient supply of mid-priced properties and the increase in budget and bargaining power will contribute to more active transactions in the mid-priced secondary market. Last but not least, investors are opted to head overseas for property purchase in view of the cooling measures launched late last year.”