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 practically 20% since its peak, and it could be an excellent time for owners to purchase — however buyers would possibly need to assume 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 an excellent time to purchase a property in Hong Kong for those who’re seeking to personal a house, however buyers looking for yield ought to have a look at Australia and New Zealand as an alternative.
Traders and owners have completely different priorities, Churchouse identified.
For owners seeking to purchase, “costs down this a lot might be not a nasty time to look to be shopping for” for those who can afford to pay mortgage and down cost, he mentioned Tuesday on CNBC’s “Squawk Field Asia.”
“There’s nonetheless a little bit of draw back dangers … however maybe the worst is over.”
Residence costs in Hong Kong dropped for 4 months straight. The official housing value index stood at 339.2 in August, down 7.9% from a yr earlier and 4.2% decrease from April peaks.
“Hong Kong might be the simplest place within the area to purchase, and I’d assume that Japan might be an in depth second,” he mentioned.
Shopping for elsewhere within the area is “fraught with all kinds of difficulties and authorized points … There are all kinds of banana skins,” Churchouse warned, explaining that house patrons in different nations both should be a resident, everlasting resident or an worker.
“Typically, you’ll be able to’t personal 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 minimize stamp duties for property patrons to assist enhance the town’s slumping actual property market.
Among the many relaxed levies, the stamp responsibility that non-permanent residents should pay for property and one other levy imposed on extra properties purchases by residents will every be halved to 7.5%.
Regardless of the constructive information for homebuyers, demand might not bounce again in full pressure as the upper value 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 just not the place,” Churchouse mentioned. “The yield right now is lower than the price of capital, lower than the rate of interest you are paying in your mortgage.”
Rental yield in Hong Kong is at the moment under 3%, whereas the efficient mortgage price exceeds 4.1%, implying a “destructive rental carry,” DBS Financial institution’s Yau mentioned.
“If the buyers have their first property, they nonetheless have to pay New Residential Stamp Obligation of seven.5% in the event that they purchase a second property,” Yau mentioned. “It isn’t an excellent time to purchase property for funding.”
The place can buyers discover good rental yield?
“The very best yield in markets on this area, I are likely to assume, are Australia and New Zealand,” Churchouse mentioned. Yield for residential property or industrial property there could also be as excessive as between 6-8% — “possibly even greater,” 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 will get a rental yield that greater than your curiosity prices in Japan.”
— CNBC’s Clement Tan contributed to this report.