Local housing prices could drop. By as much as 20 pct this year. That’s according to the head of the Macau General Association of Real Estate. Triggered, says Chong Sio Kin, by the slowdown in the gaming industry.
Housing prices will drop by 20 per cent this year, affected by the slowdown in the gaming industry and if the government continues its price-control measures on the real estate market, the president of the Macau General Association of Real Estate, Chong Sio Kin, predicted in an interview with Chinese newspaper Jornal do Cidadao.
In the interview, the Association head said that the property market is undergoing an adjustment phase, and he perceives that housing prices may mirror the drop in gross gaming revenues.
In addition, he reckons that declining gaming revenue was also the chief factor behind slowing transactions in the market last year.
“Comparing the gross gaming revenue in January this year with that of December 2014, despite the decrease having narrowed, it’s just a matter of numbers,” the newspaper quoted Mr. Chong as saying. “In the short term, I don’t see any factors benefiting [the gaming industry and the property market] appearing.”
Since June last year, Macau gross gaming revenue has dropped for eight consecutive months. In 2014, the annual casino revenue even posted a historic decrease of 2.6 per cent year-on-year.
Meanwhile, the number of housing transactions in 2014 slumped by 36 per cent year-on-year, amounting to only 7,218 transactions compared to the 11,306 transactions of 2013, despite the fact that housing prices had increased by 21 per cent year-on-year, costing MOP100,156 (US$12,519) per square metre.
Nevertheless, Mr. Chong said housing prices have actually decreased by 10 per cent recently, claiming purchasers now have more room to bargain for cheaper prices.
In addition to residential flats, he indicated that the prices of shops, offices and industrial buildings was also decreasing, the exception being car parking spots, for which both the purchase price and rent remain high.
Hengqin investment caution
Meanwhile, Mr. Chong told the newspaper that while housing in Hengqin is good for self-use it may not be good for investment at the moment.
“The continuous drop in gross gaming revenue has affected the market at a certain level. Meanwhile, the 24-hour border crossing policy and the [possible] implementation of allowing Macau vehicles with single plate numbers to enter Hengqin has amazed Macau residents in housing there,” he told the news outlet.
“Of course, there are no problems if [people] buy [the flats] for self-use. However, if [they purchase] for investment, [they] should consider it cautiously,” he claimed.
“Firstly, the development of Hengqin is still in the initial stages, with auxiliary facilities taking time to improve. Secondly, the supply of housing in Hengqin is high, As such, it is difficult for the secondhand property market there to be active. Thirdly, the housing prices of Hengqin are presciently set, so it is hard for investors to gain profits quickly, added to the fact that there are different kinds of housing taxes,” Mr. Chong said, stressing purchasers should look before they leap.