Hong Kong's sky-high property prices prove resilient in face of protests

HONG KONG: While months of Hong Kong protests have scared away tourists, sent jitters across the financial center and cast a dark cloud over the local economy, there’s one thing residents of the city are confident they can bank on – sky-high property prices.

Home prices in the former British colony have rocketed over 200% in the past decade, driven by limited housing supply and large capital flows from mainland Chinese buyers, angering many residents who can’t afford to get on the property ladder.

Lily Chow, a 32-year-old clerk, is among the lucky ones. She and her husband recently snapped up a two-bedroom apartment off the plans for HK$7.5 million ($957,000) in the New Territories.

“I am not confident in the government, outlook or economy. I am only confident that Hong Kong property prices will not drop,” Chow told Reuters in the sales office of the development.

Property firm Wheelock (0020.HK) has sold 80% of the 816 flats in its projects since late August, lower than sales at other launches this year, but “still good” given the current environment, property agents said.

As Hong Kong gears up for yet another anti-government protest on Oct. 1 – the 70th anniversary of the founding of the People’s Republic of China – there was scant sign the prospect of further violence had dampened homebuyer demand.

Hundreds of prospective buyers queued on Thursday in a sales office in the gleaming International Commerce Centre (ICC) skyscraper for a development near Mong Kok district, the site of some of the most violent protests in recent months.

“HOUSE LIKE A CELL”

A traditional belief in bricks and mortar investment and a history of strong returns from property has helped Hong Kong home buyers keep the faith.

Official data showed Hong Kong property prices rose close to 10% in the first seven months of the year, including a tiny 0.1% decline in July after the mass protests intensified in mid-June.

One reason for the smaller-than-expected drop was low transaction volumes during July, caused by a mismatch of price expectations between sellers and buyers.

But with signs last month that sellers were more willing to reduce their initial asking prices, volumes have stabilized, according to realtors.

“There’s still much real demand, and when sellers became more willing to cut prices by 10-20%, some buyers chose to enter the market,” said Derek Chan, realtor Ricacorp’s head of research. He estimates a 5% rise in prices for the full year, down from an earlier forecast of 10%.

August house price data is due on Monday and agents are expecting a bigger fall than July.