TC

13/09/2017 17:30

[I-bank focus]HK residential price growth peaks - Morgan

[ET Net News Agency, 13 September 2017] Morgan Stanley said HK property prices are up
10% this year as expectation of rate hike did not materialize - HIBOR has remained 80 bps
lower than LIBOR.
Availability of developers' mortgages and 4-5% wage growth has kept affordability in
check. This coupled with higher than expected GDP growth (4% in 1H), low unemployment
rate, and rising stock market (HSI up 27% year-to-date) could mean that property prices
could remain elevated, said the research house.
However, Morgan expects the growth to moderate to 0% by end-2018, assuming no price
movement from here. It noted a strong correlation between Centaline's Centa-City Leading
Index (CCL) YoY growth and the Hang Seng Properties Index (HSP) YoY, suggesting downside
to property stocks, especially developers.
Even in the most bullish scenario - a 5% increase in the CCL in 2H and +10% in 2018 -
the research house sees HSP remaining flattish. It said The CCL's YoY growth peaked at 24%
in June 2017 and slowed to 17% in September. Morgan expects it to slow down further,
putting pressure on stock performance. However, exposure to HK farmland and Chinese land
bank should help. (KL)

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