Prices are set to rise for another decade in the world’s least affordable property market, Hong Kong, according to UBS Group AG.
Inflows of residents will be key as the Greater Bay Area project integrates a group of mainland Chinese cities with Hong Kong, property analyst John Lam wrote in a research report. The extra buyers will be “more than enough” to outweigh waning housing demand from an aging local population, he wrote.
That would extend a relentless climb that has seen the city’s property prices triple during the past two decades. The UBS report comes as three straight months of gains make it look as though a slide in home values from August through January was just a temporary blip. Prices rose for a 13th straight week, data Friday showed.
Lam estimates annual housing demand in the city to be 60,000 units over the coming decade, well above the government’s long-term supply target of 45,000 units per year.
Hong Kong will see fewer private homes as the government focuses on public housing. The market has rebounded in recent months as sentiment revives on low interest rates and limited supply. People are flocking to purchase homes because of their fear of higher prices in the future.
At Wheelock Properties Ltd.’s project Montara in the Tseung Kwan O area, 103 potential buyers have been vying for each unit, making it the most competitive project since 2013, according to the Hong Kong Economic Times.
UBS is not alone in forecasting protracted price gains.
“There may be some short-term adjustments in prices, but they will continue to rise in the coming five to ten years,” said Bloomberg Intelligence real estate analyst Patrick Wong, citing population growth and limited land supply.
He expects prices to climb 10% this year.