Hong Kong's jobless rate has reached a nine-year high. The COVID-19 pandemic and social upheaval have pushed Hong Kong's jobless rate to a nine-year high, according to JLL's newly released Residential Market Monitor Report. Home values are being weighed down by the city's growing unemployment rate.
In the 3Q97-3Q98 Asian Financial Crisis, housing values fell by half, while unemployment surged from 2.1 percent to 5.2%, according to JLL data. Home values dropped by 30% as the unemployment rate soared from 4.4% in 4Q00 to 8.5% in 2Q03. An increase in unemployment has caused a decline of 6.1% in the JLL mass residential capital value index from its peak in July 2019. used car for sale
According to the Census and Statistics Department, the city's unemployment rate increased from 2.8% in June 2019 to 3.7% in February 2020. Following societal upheaval in 2019 and more recently, the COVID-19 epidemic, the retail, accommodation, and food services industries suffered the most impact, with unemployment jumping to 6.1% from 3.4% just a year earlier.
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Henry Mok, JLL's Hong Kong Senior Director of Capital Markets, stated, "Because unemployment is disproportionately high among the poor and working-class, it has little impact on potential purchasers. A substantial slowdown in global economic development, including Hong Kong's, is unavoidable due to the COVID-19 pandemic's impact on economic activity."
Nelson Wong, Head of Research at JLL in Greater China, stated that as the crisis deepens in Hong Kong, increased unemployment will likely reduce housing demand as some prospective buyers withdraw and more owners decide to sell, tilting the market dynamics to benefit buyers more.
"According to our projection, home prices will drop by 10-15% in 2020. Since there is no way of knowing how long an outbreak will last, the downside risks are far bigger "He came on board, too.
The unemployment rate and the JLL Mass Residential Capital Value Index have historically been closely linked.
The luxury property market in Hong Kong suffered a twin blow in the second quarter.
Rents have fallen at their fastest pace since 2017.
Recent JLL research shows that demand for luxury residential properties in Hong Kong is shrinking on both the lease and purchasing side. Since the second quarter of 2019, luxury residential property capital prices have fallen by 8.6%. Luxurious rents, meanwhile, are down 5.8%, the largest decline in the same time period since 2017.
Social unrest and the COVID-19 outbreak have affected the economy of the city. In light of the worsening economic climate, more homeowners are offering incentives to sell their properties in order to lock in revenue or reallocate funds elsewhere.
The declining number of expatriates is partly to blame for the sluggish leasing business. Especially for premium residences, they are a significant source of leasing demand. Reduced expat numbers can be explained by expatriates going back home and fewer new expatriates arriving in the second half of 2019, as well as COVID-19's more recent worldwide epidemic.
Because their housing budgets are shrinking and the trend toward personal leases continues, renters will continue to look for more cost-effective choices. In recent years, demand for high-end rentals has dwindled. With difficulties including job losses and the prospect of a deeper recession looming, the local luxury property market faces significant pressure in the near term
Henry Mok, JLL's Senior Director of Capital Markets in Hong Kong, stated, "Luxury property demand has always been more erratic. Buying and selling decisions are heavily influenced by market psychology. On the other hand, supply and demand in Hong Kong have a significant impact on the mass market. During these uncertain economic times, the luxury market will certainly face greater pricing and rental pressure than the general market."
JLL's Greater China Head of Research, Nelson Wong, stated: "Due to the slowing of the high-end residential sales market, we anticipate an increase in leasing stock as some vendors switch from selling to leasing. Due to an increase in new construction, luxury rental rates will certainly be under pressure in the near future."