Property prices in The Harbourside are now 10.6% compared to January 2019.
Home prices are expected to remain under pressure and conclude 2020 with an average drop of 10% amongst popular estates, reports Cushman & Wakefield.
Investment volume are also expected to fall to a 10-year low as the pandemic and geo-political uncertainties continue to weigh on sentiment.
Residential property transactions have dropped 6% in Q3 compared to the previous quarter in both primary and secondary sales markets. However, volumes are 30% higher when compared with Q3 2019.
Notably, property prices at Taikoo Shing had fallen their lowest level since January 2019. Property prices in The Harbourside plunged even further and are now 10.6% below the previous trough in January 2019.
Furthermore, prices of popular estates are expected to fall further in the near-term.
Whilst this indicates that social and economic factors continue to impact the residential market, the unprecedented owner-occupier demand and anticipation of a post-pandemic recovery can be strong stabilizers, according to Cushman & Wakefield.
In particular, strong pent-up demand, government policy support, economic stimulus packages and the low interest rate environment remain favourable factors that, together, may stabilize the market and induce a rebound by the end of Q3.
"The secondary sales market has come under severe challenges from the pandemic blow. However, a recent decline in new cases coupled with strong pent-up demand may support a rebound by the end of September 2020,” said Alva To, Cushman & Wakefield's vice president, Greater China & head of consulting, Greater China.
“Nonetheless, from a more holistic perspective, with no lasting resolution to either the pandemic or geo-political challenges and with unemployment forecast to reach 7% by year-end, we expect home prices to remain under pressure and likely to conclude the year with an average drop of 10% among popular estates,” To added.
Meanwhile, the investment market remained subdued in Q3 as local and foreign buyers remained on the sidelines.
Year-to-date, a total of 32 major deals—each with a consideration of over $100m—have been recorded, of which just 10 were for commercial property, according to Cushman & Wakefield.
Despite the fall in demand from local buyers, demand from PRC buyers remained relatively stable, resulting in their accounting for half of the deals concluded in the quarter.
Amongst sectors, industrial was among the most active, supported by purchases of en-bloc building. On the other hand, investment into retail, one of the sectors hardest hit by the pandemic, remained muted.
"With demand for commercial property expected to remain weak in coming months, PRC buying activity should continue to serve as a stable pillar of demand even as many local and foreign buyers continue to take a wait-and-see approach. Nonetheless, based on current trends, both the number of transactions and investment volume in 2020 are expected to fall to a 10-year low,” said Tom Ko, Cushman & Wakefield's executive director, capital markets in Hong Kong.
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