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Hong Kong’s economy will be hung in the balance in 2025
2024-11-30
Trump will officially take office as a new president of the United States on January 20 next year. Nevertheless, as a president-elect, he led the way in announcing that on the date he takes office, a further 10% tariff on Chinese goods, a 25% on Canadian and Mexican products, respectively. Trump's new policies pose e a threat to China's economy.
Given that the tariff on Chinese goods exporting to the United States is already 20%, an additional 10% tariff means that the total tariff has reached 30%, which can trigger to reduce the export of various products to United States. Consequently, It is conceivable that China export trade volume will fall significantly.
 Hong Kong's role as a super-connector will certainly be affected by the intensification of the trade war between China and the United States. Furthermore, Trump and his cabinet members are hawkish on China affairs, so the trade disputes between China and the United States will be inevitable to intensify in the coming year.
Recently, a number of research institutions and investment banks had published reports on the property market of Hong Kong in the coming year, and they believed that property prices will rise by 5% under the effect of interest rate cuts and the continuous inflow of mainland professionals. In general, they all disregarded the negative impact of Trump's tax hike on the property market.
Trump made up his mind to add 10% tariff on Chinese products on the date he takes office, which is already enough to drive down property prices by 5 to 10%. No one is sure that Trump will not impose such tariffs again. In addition, is it possible for China and Hong Kong retain their permanent normal tariff relations (PNTR) status? If not, a total of 60% tariff will be imposed to all the products exporting to the United states. Certainly, both China and Hong Kong’s economies and property markets will be hung in the balance in the year of 2025.
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1. Developers Developers face further margin pressure 2024-11-30 19:04:59 |
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Hong Kong will have high housing inventories and will likely focus on destocking in the coming years, according to S&P Global Ratings. "Developers will face further margin pressure because they will be booking residential projects acquired back when land prices were higher,” said S&P Global Ratings credit analyst Edward Chan. The weighted average earnings before interest, taxes, depreciation, and amortisation margin could edge down further to 34.9% by their fiscal year 2026. Home prices should stabilise next year after losing nearly 30% from a 2021 peak. S&P also forecasts primary sales to reach 20,000 units in 2025. |
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2. October residential price index rose by 0.6% 2024-12-01 20:44:22 |
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October residential price index rose by 0.6% month-on-month (MoM) to 290.1 points, dropped 6.8% year-to-date (YTD), according to the Rating and Valuation Department. Residential transactions during the period increased 67% MoM to 4,506 units, with both primary and secondary markets experiencing an uptick in transactions amidst the Fed rate cut in September and the relaxed mortgage loan-to-value- (LTV) ratio. First-hand residential sales also tripled to 1,611 units as buyers awaited the Fed’s confirmation of the initial rate cut in September. Meanwhile, the rental index fell by 0.3% MoM to 194.9 points, with an accumulated increase of 4.8% YTD. In addition, approximately 21,000 completed residential units remain unsold. |
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3. interest rate cuts boost investor sentiment 2024-12-04 09:33:29 |
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Hong Kong’s recent interest rate cuts are set to boost investor sentiment and market activity in 2025, Colliers said. In a report, the firm said the lower borrowing costs will attract institutional and property funds to value-driven opportunities like student accommodation. Meanwhile, the office market is expected to recover as narrowing pricing gaps stimulate transactions, whilst the logistics sector draws foreign investors due to e-commerce growth and demand for high-quality facilities. |
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4. The Land Registry reported 7,689 sale in Nov 2024-12-04 20:47:09 |
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The Land Registry reported 7,689 sale and purchase agreements for all building units registered in November, marking a 31.3% increase from October and a 117.7% year-on-year (YoY) rise. The total consideration for these agreements reached $64.1b, reflecting a 53.9% increase from October and a 161.3% growth YoY. Of these agreements, 6,298 were for residential units, representing a 146.6% surge compared to the same period last year. The total consideration for residential units was $57.3b, up 53.6% from October and 191.1% YoY |
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5. Hzlf Hk consumers anticipate income increase 2024-12-05 22:09:25 |
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Nearly half (44%) of Hong Kong consumers anticipate an income increase over the next 12 months, with Millennials leading the way at 51%, up from 40% last year, TransUnion said. In a report, TransUnion stated more than half (52%) of respondents are optimistic about their household finances for 2025, marking the highest level of optimism recorded in 2024. The increased financial optimism is driven by rising income levels, an interest rate cut by the Hong Kong Monetary Authority in September 2024, and improved financial management capabilities, with 80% of consumers expecting to pay their bills and loans in full. |
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6. Land premium revenue has reached only $3.7b 2024-12-06 21:49:49 |
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The total land premium revenue for fiscal year 2024/25 has reached only $3.7b as of October, representing 11.2% of the government's target of $33b, according to Colliers. Colliers noted that this target constitutes just 5.2% of the total government revenue goal, a sharp decline from the pre-COVID and social unrest average of around 20%. “The current land premium revenue also reflects an 81% decline from the previous fiscal year’s land premium of HKD19.58 billion, highlighting the challenges of aligning land sale strategies with market realities,” said Kathy Lee, head of research at Colliers. |
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