New flat pre-sale consent 31% down on five-year average in 2020
According to JLL's Residential Market Monitor, only 11,288 new flats were issued pre-sale consent from January to November 2020 in Hong Kong, 31% lower than the five-year average from 2015 to 2019. The limited supply of new flats helped support housing prices with a drop of only 1% seen in the first 11 months of 2020.
Figures from the Lands Department show units issued pre-sale consent in the first 11 months of 2020 were 20% less than the 14,137 units in 2019. This was mainly due to delays in government approvals and developers opting to postpone launching projects amidst the pandemic.
Nelson Wong, Head of Research at JLL in Greater China said, "The tight new housing supply has helped to hold up prices. The resilience in prices can also be attributed to the global quantitative easing due to the Covid-19 outbreak, which relieves the pressure on asset values caused by a soft economy. A loose monetary environment results in lower interest rates that lend support to housing demand. According to the Hong Kong Monetary Authority, the period average of 1-month HIBOR has decreased substantially to 0.15% in November 2020, compared to 2.19% from a year ago."
Norry Lee, Senior Director of Projects Strategy and Consultancy department at JLL in Hong Kong also commented, "As soon as the pandemic is better contained, we expect developers to put their delayed projects to the market, which could create price competitions among developers as more projects are launched. Coupled with economic uncertainties, we forecast mass residential prices to stay soft in 2021, falling by 0-5%. Yet, we believe the sell-through rates of primary projects should remain satisfactory due to robust pent-up demand in the city."