Hong Kong enjoys highest residential price growth in 2018
According to International property consultant Knight Frank, the average value of residential property across 57 countries and territories worldwide increased by 4.9% in the year to September 2018, the index's lowest annual rate of growth for two years.
Knight Frank further reports that Hong Kong leads the rankings for annual growth in the year to September 2018 but it may relinquish this top spot in the coming months. The Hang Seng Index, which in the past has acted as a lead indicator for the property market, recently slipped 12%, and add to this global trade disputes, a strengthening currency and the proposed vacancy tax for developers, we expect price growth to soften in 2019.
Last quarter's frontrunner, Malta, has shifted down a gear with annual price growth of 15.7% but only 1% over the three-month period from June to September 2018.
Of the 57 countries tracked, eight recorded annual price declines with Sweden falling into this camp for the first time in six years. Low interest rates and strong population growth fuelled price inflation for several years before a surge in the delivery of new apartments and tighter lending rules saw a reversal in price movements. Only two years ago prices were rising at 11% per annum.
Central and Eastern Europe (CEE) is an area of growth, with its countries accounting for three of the top ten rankings this quarter. CEE economies on average registered a 7.6% price rise, whilst western Europe recorded an average of 4.3% growth year-on-year. Slovenia, Lithuania and Hungary all recorded double-digit price growth in the year to September 2018. Rising wages and greater access to mortgage finance are pushing prices higher.
Mexico is the strongest performer in Latin America with prices up 9.9% on average. Consumer sentiment is rising on the back of a strengthening economy and supply remains constrained.
New Zealand, where a ban on non-residents purchasing existing homes came into force in July, saw annual price growth decline from 6.6% to 4.9% over the three months from June to September. High rates of net migration combined with limited new supply is expected to halt a slide into negative territory.
Knight Frank further reports the US housing market registered its slowest rate of annual growth since the final quarter of 2016. Higher mortgage rates on the back of eight rate rises since late 2015 has led to affordability constraints. Sales of existing homes have fallen 9.3% while housing starts have declined 8.7% since November 2017 according to S&P CoreLogic Case Shiller.
According to JLL's Residential Sales Market Monitor released this week, the first day sell-through rates for newly launched mass residential projects (where over 80 units were launched in the first batch of sales) dropped significantly in October 2018.
According JLL's latest Hong Kong-Zhuhai-Macao Bridge and Beyond: Mobility, Connectivity and Collaboration research study, both Hong Kong and Macao will soon benefit from improved transport links in the region.
According to the latest Property Market Monitor released by JLL, Grade A office rents in Hong Kong advanced by 0.7% m-o-m in August, with Wanchai/Causeway Bay posting the strongest growth on the back of robust demand, up 1.0% month-over-month.