Midland Holdings show improved housing outlook: Barclays

Policy easing is a factor.

According to Barclays’ Asia Financial & Property Conference, Midland Holdings’ sentiment for the Hong Kong housing market has improved recently due to: 1) talk of policy easing; and 2) a lack of secondary units.

However, Midland believes the recent rebound is just a false start. Volumes are rebounding from a very low base and, even after the rebound, remain below the long-term trend.

Here’s more from Barclays:

Supply is definitely on the rise. This in turn means the primary-secondary premium is likely to be maintained at a low level as developers continue to prioritize volumes.

As of end-2013 the primary-secondary premium was 0.8%. Midland believes it is very unlikely for this primary-secondary gap would return to the 20%+ range of the past few years.

One recent positive takeaway is that the current government administration appears to be more flexible/responsive than the previous administration.

While the government reiterated that fine-tuning Double Stamp Duty is not a sign of easing, considering that it came just after the weak retail sales figures in March and the weak 1 May holiday tourist arrivals suggests the government is being more proactive in managing the housing market.