Hong Kong housing bubble threatens to bust

From the SCMP (chart from ZH):

20151203_HKHOMES1_0Hong Kong home sales sank last month to a record low as an imminent interest rate in the US this month scared away prospective buyers.

According to Land Registry data, November saw 2,826 registered residential transactions, down 14.4 per cent from October and 41.7 per cent less than in November last year. In terms of value, residential transactions dropped 7.7 per cent month on month to HK$20.8 billion.
“Total home sales including those in primary and the secondary market dropped to the lowest level since we have started to gauge property transactions in 1996,” said Wong Leung-sing, an associate director of research at Centaline Property Agency.

He said prospective buyers in general held back their purchases in view of softening home prices and a potential rate hike also dented interest. Given the peg of the Hong Kong dollar to the US dollar, any increase in interest rates in Washington would impact the home market here.

“Sales volume in the secondary market fell for the fourth straight month to a 20-year low,” Wong said.

Hong Kong home prices fell 4.5 per cent after peaking in September, according to the Centa-City Leading Index, but was still up 6 per cent from the beginning of the year. Last week, 20 out of 50 housing estates monitored by Ricacorp Properties recorded zero transactions.

I wonder how much this is also the mainland Chinese capital controls which have hit Australia, UK, NZ and US property. With a falling yuan and US rate hikes (in some measure) next year this will not improve.

David Llewellyn-Smith
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Comments

  1. I hope the usa raises rates…like we should…inflation aint under 3%, house inflation is 8-10% minimum

    btw, juwai is funded by aussie lawyers who would sell their own family for a buck…I bet they are hoping to list on the nasdaq in a year or 2 and make billions, after selling out their countrymen

  2. This busy is perhaps the most obvious off all to have forseen. Some understanding if the holy trinity would help here for the HK money arty authority .
    Import capital via a pegged exchange rate from a nation that is running ZIRP and QE and guess what despite there being no crisis in HK MP run as if there was one.

    U.S rates head back to anywhere near previous levels and HK peg will break along with it’s economy .
    This is why I think QE will go forever I till the crack up boom . Every time they try to get off the junk it will force a crisis somewhere in the world which will blow back on them forcing more QE and various monetary experiments

  3. Just as a note on HK & housing – the action from the SARS scare was to clear all the slum housing and some of that was done, the rest of the cage houses were moved to Sydney & Melbourne to house foreign Guestworker students. 🙂

    Speaking of which – the bottom of the dip was about then and HK must be overdue for a bird-flu or swineflu or SARS pandemic.

    Like it’s been no news or scares on the radar for some years – but used to be a biannual if not annual event.

    A good SARS or bird flu pandemic would settle back HK housing values a bit.

    The area where the PLA bio weapons guy was visiting his HK mistress and infected / killed everyone still has reduced values.

    SARS I (which was a version only the CDC had so a USA frame up of the PLA according to independent sources) wasn’t an effective strain — it killed the hosts too quick and mutated into a less lethal form to quickly — but sure CDC or someone is working on it.