Amid signs that the city’s real estate market is becoming bear-ish, banks in Hong Kong have taken to cutting the valuations for residential properties. The South China Morning Post reports on the latest round of re-valuations.
"Lenders are increasingly setting property values below transaction prices," said mortgage broker mReferral's analyst Sharmaine Lau Yuen-yuen, adding that it indicates banks expect prices to slide in the secondary market. In a recent report, investment bank Jefferies said banks have been trimming valuations by 2 to 15 per cent since the end of August. Uncertainty about home prices is discouraging some buyers from completing transactions, Jefferies said in the report.
Agents report that owners are making price cuts in an attempt to unload property, in the face of “poor secondary-market liquidity." The publication notes that the secondary market, or re-sale homes, is at greater risk, as developers in the primary market, or new construction, are still able to offer competitive prices. Even still, an industry insider tells the Post that property prices shouldn’t drop dramatically without additional mitigating factors like further economic instability or increased unemployment. [The South China Morning Post]