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17 JUL 2019

Protests weigh on sales volumes, but prices and rents prove resilient

Sean Ellison

Sean Ellison

Senior Economist, Asia Pacific

Singapore

RICS

The results of the June 2019 RICS-Spacious Hong Kong Residential Market Survey indicate that the recent protests have impacted sales volumes, but thus far prices and rents have proven to be more resilient.

The results show that sales volumes declined modestly in June, and are expected to decline slightly over the next three months. Contributors also noted that the length of time from listing to sale had increased. Headline volumes are expected to expand only marginally over the next year, rising 1.7%.

As shown by the data, when asked whether the protests have had a negative impact on demand in June, 65% either agreed or strongly agreed. Furthermore, when asked whether the protests would have a negative impact on demand over the next twelve months, a majority (57%) of respondents either agreed or strongly agree.

A shift in tone

This shift in tone does, however, need to be kept in context. The increase in buyer demand slowed in June (in net balance terms), but remained positive for both owner occupiers and investors. Though enquiries from buyers in mainland China were reported to have contracted. In net balance terms, price growth remained consistent with levels recorded in the previous two months, while price expectations for the next three months remained steady, and rent expectations accelerated modestly.

However, the picture is more nuanced at the regional level, which shows the protests having an outsized impact on Hong Kong Island (and to a lesser extent Kowloon) relative to the New Territories. Respondents on Hong Kong Island reported flat buyer demand, and a sharp contraction in sales volumes. Volumes are expected to decline in the next three months, with no change in prices expected over this period.

Conversely, the demand in the New Territories was said to have increased in June at a similar level to May (in net balance terms) and sales volumes were little changed. The Confidence Index (see right) also contracted on Hong Kong Island, whereas it remained positive in the New Territories. Longer-term expectations for prices do not appear to have been affected.

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Confidence Index, Hong Kong, June 2019
Confidence index
Sean Ellison

Sean Ellison

Senior Economist, Asia Pacific

Singapore

RICS

Sean is responsible for the RICS Economics team’s research into the Asia-Pacific property sector, identifying market risks to the sector and analysing economic events and their effects on real estate.

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