Hong Kong housing prices could fall 25 percent next year if the trade war between the United States and China worsens, real-estate and investment management company JLL has warned.

The forecast is the latest bearish call for what is traditionally one of the world’s most expensive real-estate markets.

About 7.4 million people are packed onto mostly small, hilly islands and a jagged peninsula in southern China.

Real estate in the former British colony, a special administrative region of the People’s Republic of China (PRC) since 1997, is closely watched as a key indicator of the health of the broader economy.

According to JLL the baseline forecast is for a 15 percent fall in 2019, but a 25 percent drop in prices is possible if the trade war heats up further and stock prices continue to decline. JLL cited the tariff conflict as among factors hurting business confidence and helping contribute to a more than 20 percent decline in the Hong Kong stock market since this year’s January peak.

Analysts say prices have already fallen about two percent since the market peaked in August, and JLL’s negative outlook is hardly the first. UBS said in a recent report that housing prices in Hong Kong are the most overvalued and at the greatest risk of collapse.

CLSA said in August it expected a 15 percent fall in prices over the next 12 months. It kept that view in a report last month, citing rising local interest rates, depreciation in the Chinese yuan and concerns over the economic outlook.

 

Fulya Altunyay realestatecoulisse.com

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