Hong Kong residential costs may fall by one other 10% in 2024, in keeping with DBS Hong Kong.
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Hong Kong’s property market has plunged almost 20% since its peak, and it might be a very good time for owners to purchase — however buyers would possibly need to suppose twice, in keeping with Peter Churchouse, chairman and managing director of actual property funding agency Portwood Capital.
With property costs within the metropolis down 15-20% since their peak, Churchouse mentioned now could also be a very good time to purchase a property in Hong Kong in the event you’re seeking to personal a house, however buyers trying to find yield ought to take a look at Australia and New Zealand as an alternative.
Traders and owners have totally different priorities, Churchouse identified.
For owners seeking to purchase, “prices down this much is probably not a bad time to look to be buying” in the event you can afford to pay mortgage and down cost, he mentioned Tuesday on CNBC’s “Squawk Box Asia.”
“There’s still a bit of downside risks … but perhaps the worst is over.”
Dwelling costs in Hong Kong dropped for four months straight. The official housing worth index stood at 339.2 in August, down 7.9% from a yr earlier and 4.2% decrease from April peaks.
“Hong Kong is probably the easiest place in the region to buy, and I would think that Japan is probably a close second,” he mentioned.
Shopping for elsewhere within the area is “fraught with all sorts of difficulties and legal issues … There are all sorts of banana skins,” Churchouse warned, explaining that house patrons in different international locations both need to be a resident, everlasting resident or an worker.
“Often, you can’t own property as an investor,” he added.
Jeff Yau, Hong Kong property analyst at DBS Hong Kong, mentioned costs in Hong Kong are anticipated to proceed plummeting and will fall by one other 10% in 2024.
In October, the Hong Kong authorities cut stamp duties for property patrons to assist enhance town’s slumping actual property market.
Among the many relaxed levies, the stamp obligation that non-permanent residents need to pay for property and one other levy imposed on extra properties purchases by residents will every be halved to 7.5%.
Regardless of the optimistic information for homebuyers, demand could not bounce again in full drive as the upper price of financing will stay a hurdle for potential owners, mentioned Henry Chin, Asia-Pacific’s head of analysis at CBRE.
Greatest rental yield
For buyers in search of excessive rental yield, “Hong Kong is not the place,” Churchouse mentioned. “The yield today is less than the cost of capital, less than the interest rate you’re paying on your loan.”
Rental yield in Hong Kong is at the moment under 3%, whereas the efficient mortgage fee exceeds 4.1%, implying a “negative rental carry,” DBS Financial institution’s Yau mentioned.
“If the investors have their first property, they still need to pay New Residential Stamp Duty of 7.5% if they buy a second property,” Yau mentioned. “It is not a good time to buy property for investment.”
The place can buyers discover good rental yield?
“The best yield in markets in this region, I tend to think, are Australia and New Zealand,” Churchouse mentioned. Yield for residential property or industrial property there could also be as excessive as between 6-8% — “maybe even higher,” he added.
In Japan as effectively, it is common to seek out rental yields of about 5% or 6%, he added.
In a rustic the place rates of interest are “very, very low,” he mentioned, “You can get a rental yield that higher than your interest costs in Japan.”
— CNBC’s Clement Tan contributed to this report.
