Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

0:00
0:00

Hong Kong property brokerages slash payrolls in choppy market

Hong Kong's residential real estate market has been rattled in recent months due to a combination of interest rate rises and the fallout of China's zero-COVID policy. Layoffs expected to top 3,000 industrywide as transactions plummet.
Major real estate brokerages in Hong Kong are slicing payrolls as they try to reduce costs in a historically weak property market. Led by Centaline Property, a big brokerage that is planning to eliminate 30% of its positions, layoffs in the industry are expected to reach more than 3,000.

Rising interest rates, emigration by Hong Kong residents and a slower flow of money from mainland China are accelerating declines in housing prices in the territory. The real estate brokerage business, which was built on the assumption of ever-rising home prices, faces a shakeout. Some may not survive.

"I planned to buy a home, but decided to put it off until next year or later," said one Hong Kong resident in her 30s, blaming higher interest rates and the uncertain housing market outlook. She has put the money she had set aside for the purchase into a three-month time deposit with a high interest rate.

Only 12 of the 128 units in Chill Residence, a new condominium complex in the Kowloon district, had found buyers as of Dec. 4. The number of people delaying purchases is rising due to a slumping global economy and stock market corrections, said Sammy Po Siu-ming, the CEO of Midland Realty's residential division for Hong Kong and Macao.

The housing price index calculated by the Hong Kong government declined for the tenth straight month in November, year on year. The index was down 14% compared with the end of 2021, a downswing that is expected to widen to 15% or so by the end of 2022.

Because the Hong Kong dollar is linked to its U.S. counterpart, interest rates in the territory tend to move in the same direction as U.S. rates. The Hong Kong Interbank Offered Rate, a benchmark for mortgage rates, and the prime lending rate have risen in line with U.S. rate hikes, prompting more people to have second thoughts about buying homes in a weak economy.

Higher interest rates are not the sole reason for the real estate industry's plight. Political turmoil in Hong Kong and the enactment of a draconian national security law introduced by China have prodded many people, particularly parents with young children, to move overseas. The working population has fallen by more than 100,000 over the past two years. And with many people willing to sell their homes even at a loss, prices for previously occupied homes are crashing.

The market for luxury homes, traditionally underpinned by wealthy mainlanders, is also in a slump because of restricted travel between Hong Kong and the mainland under Beijing's zero-COVID policy. Deals involving homes priced above HK$20 million ($2.56 million) in 2022 plunged 65% from the previous year, according to JLL, a property services company.

The number of transactions handled by Centaline Property has fallen by more than 50%, while 90% of its employees have been unable to meet their sales targets, said Louis Chan, Asia-Pacific vice chairman and chief executive of the residential division at Centaline Property Agency. Centaline has already cut 1,000 jobs and closed 30 offices under a plan to shrink its workforce by 30% from around 6,200 employees at the start of 2022. It expects an additional 600 to 800 employees to retire.

At Midland, 700 employees have quit since August. Major real estate brokerages, including Hong Kong Property Services, are expected to ax more than 3,000 employees in total.

Midland Holdings, Midland Realty's parent company, incurred a net loss in January to June of 2022 as revenue plunged by half from a year earlier. It will try to survive by reducing staffing and fixed costs at its offices.

The industry shakeout has been less traumatic for small and midsize real estate brokerages than for large ones. Smaller brokerages have been able to weather the storm thanks to ample business transactions despite property price falls. But Hong Kong has some 41,000 property agents, according to the city's industry regulator. The competition has become a war of attrition with 11 brokers fighting for each deal, based on the number of transactions concluded in November.

Views are divided on the market outlook. A survey of Hong Kong residents by Citibank in September found that 51% of respondents believed home prices would drop in the next 12 months. In light of the wait-and-see mood, Natixis, a French investment bank, forecast that prices will fall 12% in 2023 and 2% in 2024.

On the other hand, there are also a number of favorable factors, such as the slowing of interest rate hikes in the U.S. and the easing of China's zero-COVID policy. Taking the likely peaking of interest rates and the relaxation of COVID restrictions into account, Morgan Stanley forecast that home prices will bottom out in the April to June quarter of 2023 and rise 5% for the full year.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Zelenskyy Seeks Ceasefire as Putin Proposes Direct Talks in Turkiye
Arsenal Stages Comeback to Draw 2-2 Against Liverpool in Premier League Clash
Cardinal Robert Prevost Elected as Pope Leo XIV, Marking a Historic Papacy
India-Pakistan conflict may be first test for Chinese military tech
Bill Gates Announces Plan to Wind Down Philanthropic Foundation and Disperse Wealth
Historic Papal Conclave Set to Commence in Rome
“Trump Supporter” Aims to Bring a MAGA-Style Shift to Romania
Common Sense Returns to Britain's Legal System: UK Supreme Court Declares a Woman Is… a Woman
EU Hits TikTok with €530 Million Fine Over China Data Transfers
Beijing Says U.S. Is ‘Reaching Out’ for Tariff Talks Amid Soaring Trade Tensions
Warren Buffett to Step Down as Berkshire CEO After Nearly 60 Years
Trump Shares AI-Generated Image of Himself as… Pope, Prompting Outrage Reaction
Germany's Alternative für Deutschland (AfD) party has now been officially labeled “right-wing extremist” by the federal office for the so-called “protection of the constitution.”
Amazon Launches Satellite Internet Service Amidst Competition with SpaceX
Transformative Changes in Women's Wrestling: The Rise of WWE Superstars
The Rush to the White Gold: Global Investment Surge in Natural Hydrogen Exploration
This is a day in Spain without electricity and internet
Trump Administration Removes National Security Adviser Mike Waltz Amid Signal Chat Controversy
U.S. Economy Shrink in Trump’s First Quarter as Tariff Policy Raises Questions
U.S. and Ukraine Poised to Sign Strategic Critical Minerals Deal Amid Geopolitical Shifts
Spain Restores Power After Unprecedented Nationwide Blackout
Liverpool Clinches Record-Equalling 20th English League Title Under Arne Slot
How do you fix this culture?
Corrupted from Within: How Deep State Power and Unelected Judges Hijacked Democracy Against the Will of the People
President Trump and Ukrainian President Zelensky just held an impromptu discussion on the sidelines of Pope Francis' funeral in Rome.
World Leaders Gather in Rome for Pope Francis's Funeral
Pope Francis Laid to Rest in Rome as World Leaders Attend Funeral
Not Child’s Play: How Competitive Gaming Became a Global Economic Empire
California Surpasses Japan to Become the World’s Fourth-Largest Economy
Peter Navarro: The Man Behind Trump’s Tariff Madness
Former U.S. Congressman George Santos sentenced to eighty-seven months for wide-ranging fraud
Pope Francis: head of the Catholic church who pushed for social and economic justice
China do not pay these tariffs - you pay it. This is new 145% tax you pay to the US government.
Cultural Battles in the Vatican: The Candidates in the Battle for the Holy See and Pope Francis's Testament
Global Leaders Pay Tribute to Pope Francis Following His Death
Wild Chimpanzees Observed Bonding Over Alcoholic Fruit
Greek Christians Celebrate Easter in Thessaloníki
US Federal Reserve Chair Issues Warning on Tariff Impact
China, China, China!
Pope Francis Makes Brief Appearance at Easter Sunday Mass
Saudi Arabia Offers Max Verstappen Unprecedented Deal to Join Aston Martin
Global Pistachio Shortage Amid Rising Demand for 'Dubai Chocolate'
Trump is assembling a coalition of Western leaders aligned with the MAGA vision, strengthening a unified front for global change
IMF Predicts No Global Recession Amid Trade Tensions
Alphabet Faces Antitrust Setbacks as Federal Judges Rule Against Google
US Billionaires Call for Higher Taxes, but Proposed 'Millionaires Tax' May Not Achieve Desired Outcome
This is Vienna, Austria in 2025.
Designed in US, made in China: Why Apple is stuck in tariff tussle
Boeing Jet Returns to US from China Amid Tariff War
US Sets Deadline for Russia-Ukraine Peace Deal Brokerage
×