Potential negative impact on Hong Kong's housing demand due to Trump's trade war and pressure on yuan, according to a research institution.
Breaking Down the Impact of US-China Trade War on Hong Kong's Housing Market
The escalating US-China trade war and the resulting pressure on the weakening yuan could create a perfect storm for Hong Kong's private housing market. The city's largest think tank has issued a warning about the potential impact on demand and market sentiment.
On Thursday, Our Hong Kong Foundation unveiled a 10-year forecast for the city's housing supply. They also highlighted factors that could potentially hinder private housing demand.
Ryan Ip Man-ki, the think tank's vice-president and head of its public policy institute, explains the short- to medium-term impact of the yuan devaluation on mainland homebuyers in Hong Kong will be negative.
In the longer term, the trade war could affect trading, a sector that comprises about 20% of Hong Kong's GDP and employment. This could lead to an economic impact on Hong Kong.
Ip also suggests that homebuyers' confidence could wane due to stock market fluctuations. However, he sees a potential silver lining in the form of a US Federal Reserve interest rate cut, which could stimulate the local property market.
A downward housing market could discourage developers from bidding for public land, Ip warns. He recommends the government to expedite the availability of sites for housing construction and reduce bureaucratic hurdles for developers.
Ip also advocates for streamlining development procedures and reducing community facility requirements for successful bidders.
The ongoing US-China trade war and yuan devaluation are creating significant headwinds for Hong Kong's private housing market through economic uncertainty, reduced buyer confidence, and currency pressures.
Key impacts include reduced mainland demand due to the yuan's increased cost of Hong Kong properties, investor sell-offs due to risk mitigation, and economic spillover from export-reliant sectors.
Analysts emphasize that proactive policy interventions, such as tax adjustments, liquidity support, currency hedging, and infrastructure investment, are critical to counterbalance trade-related volatility.
The weakening renminbi, a consequence of the US-China trade war, could negatively impact mainland homebuyers in Hong Kong, potentially shrinking the demand for private housing. The ongoing economic uncertainties could lead to a decrease in homebuyer confidence. The trade war, affecting about 20% of Hong Kong's GDP and employment, might cause an overall economic impact on the city. The yuan devaluation could discourage developers, as they may be less likely to bid for public land due to the uncertainty in the housing market. Proactive policy interventions, such as tax adjustments, liquidity support, currency hedging, and infrastructure investment, are crucial to counter the volatility caused by the trade-related challenges.
