HONG KONG • While months of Hong Kong protests have scared away tourists, sent jitters across the financial centre and cast a dark cloud over the local economy, there's one thing residents of the city are confident they can bank on - sky-high property prices.
Home prices in the former British colony have rocketed over 200 per cent in the past decade, driven by limited housing supply and large capital flows from mainland Chinese buyers, angering many residents who can't afford to get on the property ladder.
And despite the worst protests since Hong Kong reverted to China rule, property prices have hardly budged.
Property firm Wheelock has sold 80 per cent of the 816 flats in its projects since late August, lower than sales at other launches this year, but "still good" given the current environment, property agents said.
As Hong Kong gears up for yet another anti-government protest tomorrow - the 70th anniversary of the founding of the People's Republic of China - there was scant sign that the prospect of further violence had dampened demand.
Hundreds of prospective home buyers queued last Thursday in a sales office in the gleaming International Commerce Centre (ICC) skyscraper for a development near Mong Kok district, the site of some of the most violent protests in recent months.
"The political environment is shakeable, but I am pretty sure the property market is unshakeable," said office assistant Candy Lau, 32, as she queued for an HK$8 million (S$1.4 million), 273 sq ft, one-room apartment in the development by Sun Hung Kai Properties, Hong Kong's largest developer by market value.
A week earlier, Sun Hung Kai launched its first batch of 352 flats in the same development in Kowloon district, selling all but one to underscore the strong demand.
A traditional belief in bricks and mortar investment and a history of strong returns from property have helped Hong Kong home buyers keep the faith.
Official data showed Hong Kong property prices rose close to 10 per cent in the first seven months of the year, including a tiny 0.1 per cent decline in July after the mass protests intensified in mid-June.
One reason for the smaller-than-expected drop was low transaction volumes during July, caused by a mismatch of price expectations between sellers and buyers. But with signs last month that sellers were more willing to reduce their initial asking prices, volumes have stabilised, according to realtors.
"There's still much real demand, and when sellers became more willing to cut prices by 10-20 per cent, some buyers chose to enter the market," said Mr Derek Chan, realtor Ricacorp's head of research.
He estimates a 5 per cent rise in prices for the full year, down from an earlier forecast of 10 per cent.
August house price data is due today and agents are expecting a bigger fall than July.
Two other buyers told Reuters they expect home prices will climb in the long run, despite any short-term softness, because a fundamental supply shortage simply will not go away.
Every day, Hong Kong grants 150 residential permits to mainland Chinese, according to the government, adding to a population of 7.4 million crammed into just 1,100 sq km, of which 40 per cent is country parks or nature reserves.
Tiny living spaces have become increasingly common in the world's most expensive property market where some of the city's poorest people live in cage homes - wire mesh hutches stacked on top of each other.
Long-standing frustrations over unaffordable housing have spilled onto the streets during recent protests, which started over a now-suspended extradition Bill and have evolved into calls for greater democracy, among other demands.
Graffiti scrawled near one protest site read: "7K for a house like a cell and you really think we out here scared of jail".
HK$7,000 is what the monthly rent for a tiny room in a shared apartment could cost in Hong Kong, which reverted from British to Chinese rule in 1997.
Agents said the most sought-after properties are small to medium-sized apartments below 600 square feet, while the luxury segment continues to slow down due to a drop-off in Chinese buyers and caution over the United States-China trade war.
Thanks to tighter debt servicing requirements in recent years, most home owners are expected to be able to continue meeting repayments even in the case of a big correction, avoiding systematic pressure, analysts say.
While JP Morgan predicts a 30 per cent slide in prices in a worst-case scenario, many people remain confident in the market.
"The protests are only a small incident happening in Hong Kong," said Ms Josephine Tsang, a 57-year-old retired teacher who recently bought an apartment for her 28-year-old son. "If I don't buy now, the price will keep rising."