The Hong Kong property market is to continue rising in value as population inflow from China’s Greater Bay Area helps to sustain it.
The latest research from Swiss bank UBS indicates that housing supply in Hong Kong will fail to keep up with demand for the next ten years at least, meaning that property prices will spiral upwards as both Chinese nationals and overseas property investors compete to purchase residential property.
Hong Kong’s annual housing stock is estimated at 45,000 per year, which falls 25 per cent below what is needed according to the UBS research team led by John Lam.
Mr Lam said: ‘Our analysis based on demographics and non-local demand suggests annual housing demand would stand at 60,000 units.’
The Swiss bank is not alone with its upbeat view of the Hong Kong property market. Moody’s Investors Service said that property prices should rise between 8 and 10 per cent over the next 12 to 18 months.
The prediction from the UBS research team is taken all the more seriously as they correctly predicted the Hong Kong property market’s correction between August and December last year when median property prices fell by nine per cent.
The correction turned out to be a blip as US and Hong Kong Monetary authorities kept mortgage rates low and encouraged buyers and investors to keep purchasing. Median property prices in Hong Kong have now risen again by five per cent over the first quarter of 2019.
The Greater Bay area, with a combined population of 70 million and economic output of 1.5 trillion US dollars is expected to continue driving property prices in Hong Kong.
Lam said: ‘Given limited housing supply and the integration with the Greater Bay Area, we forecast the housing shortage to persist and widen, supporting long-term property prices.’