To buy or not to buy? That is the question many Hong Kong investors watching the British property market’s slide are asking themselves.
Most property professionals say the answer to the question is buy – although some warn the downturn has years to run.
Latest data shows British property prices continuing to fall. According to the Land Registry, residential property prices fell 0.2 per cent in April – the eighth monthly fall in a row.
In London, Charles Oliver, a director of property finder Chesterton Private Clients, recommended potential buyers take the plunge. “Vendors are becoming more realistic about prices and for anyone thinking of buying now there could be some good opportunities,” he said.
Some Hong Kong investors appear to be doing just that. “There is still good appetite for London property,” said Andrew Jones, a partner at estate agency Knight Frank. “People in Hong Kong still see London as a premier international market.”
Camilla Dell, the managing director of property finder Black Brick, said investors were right to enter the market now because bargains were available.
“Whilst there has been a downturn in prices, property is a medium to long-term investment, over five to 10 years,” Ms Dell said. “Predicting when the market will bottom out is impossible and at the moment we are able to negotiate very aggressively.”
By pinpointing those vendors desperate to sell she was able to knock 11.5 per cent off asking prices on average, she said. The sellers included financiers who had lost their jobs because of the credit crisis, and developers whose finances were overstretched.
But Lucian Cook, a director of residential research at Savills estate agency, said buyers ought to take into account the prospect of prices falling in the future if they bought now.
“As things stand the downturn has not worked its way through the system yet and more has to come,” Mr Cook said. “You would have to say this is particularly the case in prime central London and the new-build sector and we believe prices will fall 10 per cent in prime central London this year.
“Here on it depends on what is happening in the economy, because if the credit crunch gets worse and the economy worsens, then we could have a more prolonged downturn than we were anticipating.”
However, buyers of the country’s most luxurious homes had less to worry about because values for these super-prime properties were continuing to rise, said Mr Cook.
Savills forecast prices would increase 3 per cent for homes valued at £4 million (HK$61.25 million) or more this year, because of strong overseas interest.
Robert Hadfield, the managing director of investment property management company Pineflat, urged caution. “We would definitely advise Hong Kong buyers to sit on their hands at the moment. Although it is definitely a buyers’ market, I don’t feel that there are any real bargains out there yet.
“I feel that there is an additional vulnerability in that many Hong Kong buyers like to buy high-yielding flats to get the maximum weekly rental. This strategy leaves landlords at risk and although I keep reading about the buoyant rental market, our experience is that rental property is only letting quickly if keenly priced.”
But for the moment Hong Kong owners of British property had not been spotted among vendors desperate to sell, agents said.