A report published by Cushman and Wakefield predicts that Hong Kong home rents will continue to rise in the second half of 2023 despite ongoing volatility in home prices. The housing market experienced a recovery in prices following the reopening of the border with mainland China but faces challenges from high-interest rates, stock market volatility, and geopolitical tensions. However, the leasing market has seen positive growth supported by the government's Top Talent Pass Scheme. Cushman expects the rental market to remain stable and outperform home prices, with a potential increase of 5 to 8% this year.
Despite the ongoing volatility in home prices, Cushman and Wakefield predict that Hong Kong home rents will continue to rise in the second half of 2023. The housing market initially saw a recovery in prices following the reopening of the border with mainland China in February. Despite a slight decline in May, the prices of lived-in homes have increased by 4.9% over the past five months, according to a report by Cushman.
While Hong Kong's rental market is projected to continue growing in the second half of 2023, the residential price market faces challenges from high-interest rates, stock market volatility, and geopolitical tensions. Experts suggest that these factors may hinder the recovery of residential prices. However, the leasing market has seen positive growth since the border reopening, supported by the Hong Kong government's Top Talent Pass Scheme. The rental index has already risen by 4% in the past four months, indicating a favourable trend. Cushman expects the rental index to remain stable and outperform home prices by one to two percentage points, potentially increasing by 5 to 8% this year.
Forecasts for Hong Kong's property market in the second half of the year diverge, with some analysts predicting a recovery as the economy rebounds from the pandemic, while others caution against ongoing and potential headwinds such as further interest rate hikes. Cushman anticipates more price volatility and forecasts a 3 to 7% increase in home prices for the year. Raymond Cheng of CGS-CIMB Securities and Derek Chan of Ricacorp Properties share similar views, expecting average home price increases of around 5% with a peak in interest rates this year. Knight Frank, JLL, and Citi, on the other hand, forecast a drop of up to 5% in lived-in home prices for the entire year and believe that interest rates will continue to impact the market until early next year.
In response to the growing demand for rental options in Hong Kong, Sun Hung Kai Properties announced the launch of its new rental project, Townplace West Kowloon. This flagship project, consisting of 843 units, is specifically designed to cater to young talent relocating to Hong Kong under the city's new immigration policy for hiring top talent.
The developer noted that the policy has significantly increased the demand for rental accommodations among young professionals. With the introduction of Townplace West Kowloon, Sun Hung Kai Properties aims to meet the needs of this demographic and provide tailored housing solutions. This initiative reflects the evolving market sentiment and the recognition of the importance of attracting and accommodating young talent in Hong Kong's rental market.
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