When the Li family makes a pronouncement on property, Hong Kong tends to listen. So when Li Ka-shing's elder son, Victor Li said property prices "have been slowly moving up", and proclaims he is bullish, it is time to reassess the moribund Hong Kong property sector.
Indeed, these have been a painful seven years for the Hong Kong property market, with residential house prices down 70% from their highs and 106,000 households suffering from negative equity.
The sluggish property market has sapped the city's confidence, and crippled the government's finances. If Li is right and it is about to turn that will be good news for the whole Hong Kong economy. Certainly some brokerage houses, such as CLSA have called the bottom and said Hong Kong is in the early stages of a recovering property market.
We polled our readership to get its view. We received over 600 responses to our poll, and the results are grounds for some optimism.
While 81% of respondents did not think prices would rise in 2003, over half thought they would rise in 2004. But where is the bottom? Around 44% thought that prices would fall no more than 10% before hitting bottom. A further 36% thought that they would fall no more than 11-20%. So the consensus would seem to suggest that we are about 10-12% off the true bottom, which supports the idea that prices could rise next year.
Then again, those polled were divided on the simple question "Is now a good time to buy?". Over half (54%) said no, and the remainder said yes. This tends to once again suggest the market is ‘in the balance' and approaching a pivotal, tipping point.
Supporting this view is the fact that property company stocks have recently outperformed, although it is worth cautioning that Merrill Lynch reckons the unsold land bank is around 75,000 units. But clearly a lot of the froth has gone out of the market. No number tells this story better than the number of property agents. According to UBS there used to be 5000 property agents. Now there are about 500.
Results in full:
1 Are Hong Kong property prices likely to rise in 2003?
Yes = 116 votes
No = 497 votes
Total votes cast = 613
2 Are Hong Kong property prices likely to rise in 2004?
Yes = 327 votes
No = 288 votes
Total votes cast = 615
3 How much more (in % terms do prices need to fall before they bottom?
Less than 10% = 179 votes
11-20% = 145 votes
21-30% = 55 votes
More than 30% = 28 votes
Total votes cast = 407
4 Is now a good time to buy HK property?
Yes = 281 votes
No = 332 votes
Total votes cast = 613