12 December 2008
Developers in Hong Kong are failing to adjust, or indeed accept, that the state of the country’s property market looks grim, by offering optimistic messages.
But faced with recession, looming job cuts and rising mortgage rates, there are growing fears that there will be a repeat of the 2003 market slump, when the SARS respiratory disease ravaged Hong Kong's economy.
Although average property values have dropped by around 20% this year, Sun Hung Kai Properties predict that prices will rebound 5% in 2009 – but few people believe them.
"I doubt that," Stephen Riady, president of Indonesia's Lippo Group, said of the upbeat predictions. "I think Hong Kong will probably go down much more. It's a very volatile market. It'll go down more than Singapore."
A Reuters poll of analysts at the end of last month showed Hong Kong apartment prices were expected to drop 20 percent by the end of next year and Singapore prices would fall 21 percent.
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