Midland Properties: The increase in property prices in Hong Kong in the fourth quarter is expected to expand to nearly 4%, maintaining the forecast of an increase of about 15% for the whole year

The Zhitong Finance App learned that Ma Taiyang, CEO of Midland Group and executive director of Midland Properties, said that after the Hong Kong property market rose markedly in the first half of the year, after entering a short consolidation period in late June, 1. The speed of second-hand trading has slowed down. Recently, however, many high-profile new listings have been launched at competitive prices, and the market response has been ideal, driving the gradual release of backlog purchasing power, and 1. Second-hand residential transactions have stabilized at the same time.

Rental market performance continues to be strong, with rents repeatedly reaching new highs. Ma Taiyang pointed out that the fundamentals of the Hong Kong property market have remained stable and are gradually coming out of the consolidation period, thanks to many factors such as a low interest rate environment, improved economic growth, continued inflow of population and talent, reduced inventories, abundant capital, and rising rents, as well as the HKSAR Government's efforts to promote the development of the northern metropolitan area, and is gradually coming out of the consolidation period, fueling a new round of upward momentum in the fourth quarter.

Looking ahead to the fourth quarter, Ma Taiyang expects that as the market climate improves, developers will speed up the pace of promotion to further release rigid demand, demand for building replacement, and long-term investment demand, and the housing market is expected to usher in a broader trading recovery. It is predicted that first-hand private home transactions in the fourth quarter will increase by about 50% month-on-month to about 5,100; second-hand residential sales are expected to increase by about 10% month-on-month to about 12,700.

In terms of rent and property prices, Ma Taiyang pointed out that although rents have broken through one after another, the current property price is still nearly 16% lower than the historical high in 2021, and there is some room for “falling behind.” Property prices are expected to maintain a steady upward trend in the third quarter, rising slightly by about 1% throughout the quarter; in the fourth quarter, they are expected to return to an upward trajectory, increasing to nearly 4% in a single quarter, and maintaining the forecast of a 15% increase in property prices throughout the year.

Ma Taiyang stressed that if there is no sudden reversal in peripheral interest rates, geopolitics, and financial markets, the property market is expected to enter a healthy recovery phase where trading rebounds and property prices rise steadily in the fourth quarter.

In terms of interest rates, Cao Deming, chief vice president of Meridian Mortgage Referral, said that the US CPI and core CPI increases both slowed in July and are in line with market expectations. If the August inflation data released this week does not unexpectedly soar, it is expected that the Federal Reserve will remain on hold next week to keep interest rates unchanged.

However, Cao Deming warned that the latest US non-farm payrolls added 162,000 in August, higher than market expectations. Coupled with the recent rise in the geopolitical situation, the new chairman of the Federal Reserve still sticks to the long-term inflation target of 2%. If future inflation data soars again, it will provide support for interest rate hikes. It is not ruled out that the Federal Reserve will launch a “defensive” rate hike in the fourth quarter. Even if the US raises interest rates before the end of the year, the Bank of Hong Kong may not immediately follow, or will only slightly raise the Best Prime Rate (P).