Hong Kong’s housing to benefit from reopening and rate stabilisation
We expect Hong Kong’s housing prices to stabilise in 2023, following a 15% peak-to-trough decline. This will be driven by a combination of mainland China’s border reopening lifting Hong Kong’s economic outlook, mortgage rates stabilising from Q2 onwards, and the relaxation of stamp duty measures for non-local homebuyers. Local sentiment has improved, which is a potential precursor for a bottoming out of housing prices.
What you will learn:
- Housing investment should return once the US Federal Reserve ends its rate hiking cycle, thereby easing pressures on local banks to raise their prime lending rates further. The city’s recovery is also benefitting from the border reopening progress. Moreover, rental yields are higher than bank deposit rates.
- The government has announced it will refund stamp duties on the first home purchased by eligible candidates after they become permanent residents. This creates an incentive, particularly for mainland people residing in Hong Kong, to buy or invest in residential properties. Along with the reopening of borders and government measures to lure more talent, an inflow of skilled persons and high-income earners from the mainland could bolster housing demand.
- Downside risk stems from a higher-than-expected US terminal rate, which could result in a deeper housing market downturn. In this scenario, our proprietary Global Economic Model suggests private consumption and investment could drop 0.3ppts and 3ppts, respectively, relative to our baseline. GDP growth would be 0.8ppts lower than our baseline forecast of 1.4%.
Office jobs underpin our five-year employment growth outlook for APAC
Office-based sectors have been the key driver of economic growth across APAC’s key cities over the last 10 years. We forecast that will continue, generating many additional jobs.Find Out More
APAC: Fiscal policy will not save the day this time around
Though the impact of a slowing global economy is weighing on Asian economies, we expect fiscal consolidation to continue, which means the fiscal impulse, government balance adjusted for cyclical movement in the economy, will be negative in most places.Find Out More
China travel recovery: Timings are clear, but magnitude remains uncertain for 2023
The late December announcement of China’s intention to re-open its borders for travel took the international community by surprise, with little time to prepare. Border re-opening fell just before Lunar New Year, which proved to be significantly stronger than the last with domestic travel reportedly at 89% of 2019 levels and an initial surge in both inbound and outbound visits, albeit to levels well below those in 2019.Find Out More