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AsiaXPAT (Hong Kong) - When it comes to financial markets, animal spirits, the herd mentality, greed, fear and narrative all come into play determining when a market soars,
or crashes.
Throw in low / high interest rates and liquidity as other factors that influence markets, including HK property.
Animal spirits are headed south in HK if the comments from property agents from the major brokerages in Hong Kong including Savills and CBRE are any indication. They are predicting a grim outlook for both residential and commercial property in Hong Kong in 2020.
Considering that property agents are generally bullish, are these forecasts best case scenarios for the market. Are the downside risks far greater than these prognosticators are telling us?
The HK protests continue to simmer and boil over from time to time. The Wall Street Journal just ran a story regarding Moody’s downgrade of HK citing ‘the Hong Kong government’s failure to deal with 7 months of unrest’ going on to lay the blame for the recession in Hong Kong at the feet of Carrie Lam and her government.
The situation in Hong Kong is not improving. It is in fact worsening, even though the protests are not as frequent nor as violent. Tourists including those from mainland China, are continuing to stay away. Brand Hong Kong is severely damaged and the city now ranks up there with Kabul as a top place to visit in 2020.
Businesses are slamming their doors shut permanently across Hong Kong with retailers and restaurants particularly hard hit. But everyone is beginning to feel the pain except perhaps emigration consultants and currency transfer outfits.
Layoffs are starting to pick up steam as the jobless rate is beginning to creep up. Jobless people do not consume goods and services and this will lead to additional layoffs.
This will strengthen the waves of recessionary forces that are crippling the Hong Kong economy and will at some point, if not checked, result in a tsunami that will flatten the Hong Kong property market.
Prices will drop gradually, then all of the sudden.