Hong Kong real estate market reappears inflection point real estate shares pressure will remain under pressure in the second half of the year

category:Finance
 Hong Kong real estate market reappears inflection point real estate shares pressure will remain under pressure in the second half of the year


Collective weakening of real estate stocks

Hong Kongs property market has gone through two downward curves since July 2018. According to data from the Land Registry of Hong Kong, Hong Kongs housing market has declined since July 2018. By December 2018, Hong Kongs housing sales had only 2060 units, down 69.3% from the June peak of 6713 units. Since this year, Hong Kongs building sales contracts have risen for four consecutive months, ending abruptly in June. In May, Hong Kong registered about 10,353 building sales, a monthly high in the past seven years. However, since June, Hong Kongs property market has suffered a decline, with only 6211 and 6380 contracts in June and July, respectively, down 32.9% and 24.6% year-on-year.

In addition, according to Hong Kong Central Plains real estate data, 169 second-hand sales contracts were registered in Hong Kongs top 10 blue-chip housing estates in July, with a total value of HK$1.432 billion, down 10.6% and 18.6% respectively from 189 and HK$1.76 billion in June, a new six-month low. The performance of blue-chip houses is generally regarded as an important reference index of the market prosperity by the property market in Hong Kong.

The adjustment of Hong Kongs property market has not only occurred in residential areas, but also in office and retail properties. Laifang data show that the rental climate in the Grade A office market in Kowloon slowed down in June, with turnover falling by about 30% monthly. Most of the lease transactions in Kowloon East are less than 3,000 square feet, and the market climate is low.

The downturn in the property market is also directly reflected in the share prices of local property stocks in Hong Kong. In the secondary market, Hong Kongs local real estate shares have fallen considerably recently. By Fridays close, Xinhungkais production had fallen by 4.23% and 11.74% in July and August, 4.35% and 7.74% in length, 9.72% and 10.66% in real estate in Kowloon, 5.34% and 6.63% in Hengkai, and 9.17% and 12.88% in new world development. All of the above stocks fell more than the same period.

Housing market will remain under pressure in the second half of the year

Guo Ziwei, Chairman of Real Estate Investment, said that the Fed had the opportunity to cut interest rates again this year, which is a good news for Hong Kongs property market.

Shi Yongqing, chairman and President of Central Plains Group, said that as a beneficiary of quantitative easing in the past, some investors are still willing to invest in the property market. Therefore, it is expected that Hong Kongs property prices will compete at a high level and adjust slowly. The second half of the year is expected to decline, but it is not easy to fall sharply.

According to the Research Institute Laifangs earlier analysis of the correlation between housing prices and the Hang Seng Index in Hong Kong, it is found that the trend of housing prices in general follows the change of the Hang Seng Index, but lags behind for three months. Data show that in May this year, the Hang Seng Index fell by nearly 10% in a single month. In addition, the Hang Seng Index has fallen by more than 2% and 6% since July and August, respectively. Therefore, the agency expects a corresponding adjustment in the price of general residential buildings. In addition, under the influence of uncertain overall environment, Laifang expects that retail business performance will remain weak. It expects that the rent of high-quality street shops will fall by 5% - 10% this year, while the rent of shopping malls should remain relatively stable. Goldman Sachs recently released a report that it expects Hong Kongs property market to be bumpy and residential property prices will remain at a high level in the future, but there will be fewer transactions. Goldman Sachs estimates that residential property prices in Hong Kong will be roughly flat this year, and will soften somewhat from this year to the second half of the year, and expects that residential property prices will rise by an average of 3% annually in 2020 and 2021. Goldman Sachs estimates that office rents in Hong Kong will remain flat this year, with annual declines of 5% and 3% in 2020 and 2021 (previously expected annual increases of 2% to 3%). At the same time, Goldman Sachs lowered the target prices of Xinhongkai Real Estate, Changshi Group, New World Development, Archaean Real Estate Co., Ltd., Xinhe Real Estate Co., and Kowloon Warehouse. Source: Liable Editor of China Securities News: Yang Bin_NF4368

According to the Research Institute Laifangs earlier analysis of the correlation between housing prices and the Hang Seng Index in Hong Kong, it is found that the trend of housing prices in general follows the change of the Hang Seng Index, but lags behind for three months. Data show that in May this year, the Hang Seng Index fell by nearly 10% in a single month. In addition, the Hang Seng Index has fallen by more than 2% and 6% since July and August, respectively. Therefore, the agency expects a corresponding adjustment in the price of general residential buildings. In addition, under the influence of uncertain overall environment, Laifang expects that retail business performance will remain weak. It expects that the rent of high-quality street shops will fall by 5% - 10% this year, while the rent of shopping malls should remain relatively stable.

Goldman Sachs recently released a report that it expects Hong Kongs property market to be bumpy and residential property prices will remain at a high level in the future, but there will be fewer transactions. Goldman Sachs estimates that residential property prices in Hong Kong will be roughly flat this year, and will soften somewhat from this year to the second half of the year, and expects that residential property prices will rise by an average of 3% annually in 2020 and 2021. Goldman Sachs estimates that office rents in Hong Kong will remain flat this year, with annual declines of 5% and 3% in 2020 and 2021 (previously expected annual increases of 2% to 3%). At the same time, Goldman Sachs lowered the target prices of Xinhongkai Real Estate, Changshi Group, New World Development, Archaean Real Estate Co., Ltd., Xinhe Real Estate Co., and Kowloon Warehouse.