Hong Kong property prices to rise 5-10 per cent by year-end, Citi expects

Hong Kong home prices have bottomed out and are likely to rise between 5 and 10 per cent from this month up to the end of the year, as the Covid-19 outbreak in the city comes under control and economic activity picks up in its wake, according to Citi.

“Home price should resume an uptrend once concerns on Covid-19 are gone,” Citi’s property analyst Ken Yeung wrote in a research note on Monday. “We generally expect below-average transaction volume will continue to accumulate pent-up demand in the market, which has started to unleash recently as concerns on [the] virus outbreak have dissipated.”

It is the first major bank to forecast an upswing in Hong Kong’s property prices that have been held down by weakening sentiment resulting from an economy battered by months of anti-government protests and the coronavirus pandemic.

Due to memories of the severe acute respiratory syndrome outbreak in 2003 and the 2008 global credit crisis as well as the subsequent rebound in local home prices, many potential buyers are likely to appear as interest rates are expected to stay low for a while with a further boost from quantitative easing, according to Citi.

On Tuesday, data from the Land Registry for April showed sentiment was improving. 4,866 property transactions, comprising homes, offices and car parking spaces, totalling HK$38.4 billion were sealed last month, with both volume and value up nearly 7 per cent from March. Both figures were also the highest in five months.

“Hong Kong’s housing market has shown it is virus-proof as prices only declined 1 per cent in the first three months when the Covid-19 almost paralysed everything across the world,” said Derek Chan, head of research at Ricacorp Properties. “Demand was just deferred, it did not disappear. We’ve seen more homebuyers starting to flock to the market.”