Already saddled with the world's most expensive real estate, Hong Kong will see its property prices rise again over the next few months to even pricier levels.
Some analysts are predicting property prices to jump by 10 percent this year after only a fleeting correction towards last year. The reason: unmet demand; the probability of slower interest rate hike and the possibility, however remote, of the United States and China, somehow crafting a new trade deal that takes some of the pain out of Trump's trade war.
The combination of these factors boosted total transaction volumes by 120 percent in January to 4,355 sales from 1,963 in December, according to Centaline Property Agency Limited, one of the largest property agencies in Hong Kong.
Citi sees prices rebounding starting March, and forecasts prices rising by a stratospheric 30 percent over the next two years. This year might see a hefty 5 percent spike.
"There may be black swan events but it shouldn't change the long-term up-cycle...our market is in a serious shortage," said Ken Yeung, head of Citi's Hong Kong property research, in explaining the coming surge.
Yeung estimated total housing supply at 38,000 units on average per year until the end of 2021. This total is far short of demand for 53,000 units per year.
"Property rebounds have been strong every time in the past because corrections are against the fundamentals," he said. "When a series of negative news happens, many people with real demand, for example the newlyweds, defer their purchases, creating pent-up demand. These demands don't vanish, they accumulate."
Investment group CLSA Ltd also expects the property market to rebound by up to 15 percent from April to the the end of 2019. It noted that pent-up demand from mainland Chinese gaining their Hong Kong residency will be unleashed this year.
The 2018 price cool-off slowed down but didn't stop, the momentum of a decade-long bull run where prices surged more than 200 percent. This slowdown had global real estate firm JLL forecast in November that Hong Kong housing prices face a potential slump ranging from a 15 percent baseline to a jump of as much as 25 percent in 2019.
JLL said Hong Kong's market is entering a "correction phase." Because of this, prices have the potential to plummet further, predicted JLL.
The firm cited the trade war between China and the U.S. as among the factors hurting business confidence in the city. The trade war helped contribute to a more than 20 percent drop in the Hong Kong stock market since the market peaked in January 2018.
Hong Kong's private home prices fell for the fifth consecutive month in December. It slowed by 2.4 percent from November, according to official data.
All this is now moot in light of the changed economic and political climate. And it's worth noting that despite the temporary slowdown, prices still rose 1.6 percent for the whole of 2018.
Analysts said a rebound in prices over the next few months means potential buyers will have a limited amount of time to get their slice of the city's exorbitantly priced real estate.
