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21 APR 2019

Sentiment rebounds as respondents report a return in buyer demand

Sean Ellison

Sean Ellison

Senior Economist, Asia Pacific

Singapore

RICS

The results of the March 2019 RICS-Spacious Hong Kong Residential Market Survey show a sustained rebound in sentiment in Hong Kong's housing market.

The Confidence Index saw a sharp increase for a second consecutive month rising to +53 in March. On Hong Kong Island the index rose to +66, the highest reading since April 2015.

Data shows the significance of the shifts in pricing in the past month. Respondents reporting aggregate price declines of 0–5% fell sharply from February, while the opposite was true for those reporting price increases of 08%. In net balance terms, the share of contributors reporting an increase in prices outweighed those reporting a decrease for the first time since September 2018.

Data indicates that the pent-up demand that had been waiting on the sidelines has re-entered the market as it has stabilised. However, the outlook remains somewhat cautious over the longer term, an indication that the market does not expect a repeat of the rapid increases in prices and rents experienced in 2017 and early 2018.

Sean Ellison, Senior Economist, Asia Pacific, RICS

This was underpinned by a robust increase in demand. New buyer enquiries increased at the fastest pace in two years. Vendors appear to have recognised the return of buyers to the market, data shows that instructions to sell rose in March and the indicator of agreed sales rising at the fastest pace (in net balance terms) in two years. Against this backdrop, short-term expectations for prices and sales increased for the second consecutive month and are now firmly rooted in positive territory.

Data shows that respondents see prices increasing 2.3% over the next year. Although this is more optimistic than what has been expected in previous months, there is still a degree of caution relative to previous upcycles. A weighted average of a third of respondents still expect nochange or a decline in prices over the next year. A similar dynamic was reported for the lettings market.

Spacious' user data for March showed a continued improvement to sale market enquiry rates, which is a proxy for buyer demand. The signal has now been positive for four months in a row and accurately signaled the increased transaction volumes recorded in the previous three months, following a multi-year low in December 2018. Seller and landlord confidence returned in March with Spacious' sale and rental listing price signals both turning positive for the first time since July of 2018, which is a bullish sign for near-term pricing.

 

James Fisher, COO and Head of Market Analytics, Spacious

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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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