2 reasons to blame for Hong Kong's sluggish home sales market

Capital values remain under pressure.

Citing Jones Lang LaSalle, Barclays said housing sales market will remain weak, given the downside risks from looming interest rate hikes and the potential for yet more policy measures from the government next year.

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Therefore, capital values in the residential sector will remain under pressure and continue with mild correction. During the first 11 months of 2013, residential transactions volume fell 38%, from 6,800 per month on average in 2012 to 4,200 per month on the back of the government’s cooling measures.

This was even lower than the monthly average of 4,700 during the SARS period (March to May 2003). In the primary market, the price discount offered by developers in 2H13 led to capital value in the housing market down by 2.6% and 1.9% in the mass and luxury sectors, respectively.

However, given the limited housing supply, JLL does not anticipate a freefall or collapse in home prices.