Hong Kong is the only major city in Asia that will not see any growth in luxury home prices next year, as investors stay on the sidelines until the months-long anti-government protests end, after having risen by about 40 per cent in the 10 years to 2018, Knight Frank said.
"Against a tumultuous political backdrop, we expect Hong Kong's luxury segment to see largely static prime prices in 2020," according to a report by the consultancy that tracks 45 major cities worldwide.
However, prime property prices in Singapore and Sydney will rise by 3 per cent and 4 per cent, respectively.
The report also found that luxury home prices, which refer to top 5 per cent of most expensive homes, rose at their slowest pace in a decade " 1.1 per cent " in the year to the end of September, as global geopolitical uncertainties and economic worries kept investors on the sidelines.
Luxury home prices in Paris are expected to outperform major cities globally. Photo: AFP
"From the interminably tedious Brexit negotiations to the US-China trade tensions, Hong Kong protests and climate change, the level of uncertainty ramped up a gear in 2019," the report said.
Buggle Lau Kai-fai, chief analyst at Midland Realty, said that Hong Kong's property market has been on a roller-coaster ride this year.
"In the first half we saw an increase in both volume and prices of residential units, and in the second half we saw a drop in both volume and prices," he said.
Figures from Centaline Property Agency show that transactions of luxury villas dropped to a four-year low of 23 month on month in October, while value fell 25 per cent to HK$792 million.
Hong Kong's property market suffered two of its worst downturns in 1997 and 2008, when the severe acute respiratory syndrome outbreak and the global financial crisis hit the city, respectively.
Knight Frank said Paris' luxury market is likely to outperform the rest in 2020 with an estimated 7 per cent growth, helped by economic stability, low interest rates, tight prime supply and strong tenant and second home demand.
Berlin and Miami, meanwhile, are estimated to post 5 per cent growth each, owing to strong economic fundamentals and resilient demand, followed by Geneva and Sydney at 4 per cent.
"Confidence in both residential markets has returned due to lower interest rates and a limited supply pipeline," Knight Frank said. "Both cities are also the recipients of significant transport investment."
Other analysts believe that Hong Kong's overall residential property market is likely to see a single-digit decline next year.
"We believe that the present economic slowdown will be a significant factor affecting demand for residential properties and residential prices in 2020," said Letizia Garcia Casalino, head of residential services for Hong Kong at Colliers International.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
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