📈 Housing price ups and downs: Lessons from historical data

The Hong Kong property market has long been known to "only rise, never fall." However, historically, property prices have experienced numerous periods of significant ups and downs. Today, we'll detail the ups and downs of the Hong Kong property market, analyzing data and events to help you understand the underlying patterns and draw insights. This way, your next property purchase or investment will be informed by a more informed approach, rather than blindly following trends.

🔑 Major factors affecting property price cycles

1. Interest rate trends 💸

Raising interest rates will increase mortgage costs and suppress demand; lowering interest rates will stimulate entry into the market.

2. Economic environment

Economic growth and rising incomes will drive up house prices; conversely, economic recession and high unemployment will hit the property market.

3. Government policies

Stamp duty, mortgage ratio restrictions, and supply policies will all directly affect the property market cycle.

4. Social and emergency events⚠️

Events such as SARS, financial crises, and epidemics often cause the market to plummet in the short term.

📊 Hong Kong property market's major upswing and downswing cycles

1978–1981: The first big uptrend🚀

• Background : The economy is growing rapidly, Hong Kong people’s income is increasing, and there is great demand for investment.
• House price trend : House prices have more than doubled in three years.
• Lesson learned : During economic booms, house price increases are often exaggerated.

1981–1984: High interest rates + Sino-British negotiations

• Background : The US raised interest rates, causing Hong Kong interest rates to rise sharply; the Sino-British negotiations made the outlook uncertain.
• House price trend : House prices have plummeted by about 50% from their peak.
• Significance : Geopolitical factors and high interest rates are enough to halve property prices.

1985–1997: Continuous uptrend + peak before the handover in 1997📈

• Background : The economy was booming and the financial market was active; before 1997, Hong Kong people were optimistic about the future.
• House price trends : Since the low point in 1985, house prices have increased more than sixfold in 12 years.
• Significance : Long-term low interest rates coupled with economic confidence can easily drive an ultra-long uptrend.

1997–2003: Asian Financial Crisis + SARS Hit Hard📉

• Background : The Asian financial crisis put pressure on the Hong Kong dollar and caused interest rates to rise sharply; the subsequent dot-com crash and the SARS epidemic further hit the economy.
• House price trends : House prices fell from a high in 1997 to a low in 2003, a cumulative decline of approximately 65%.
• Lesson learned : When a high-leverage era meets a financial crisis, property prices can fall for years.

2003–2008: Low interest rate environment + economic recovery 📈

• Background : After SARS, the government boosted the economy, mainland tourists came to Hong Kong, and the economy rebounded; at the same time, it entered a low-interest environment.
• House price trend : Starting from a low point, house prices have more than doubled in the past five years.
• Inspiration : Policy support + low interest rates are the key to the recovery of the real estate market.

2009–2018: Super long uptrend after the financial tsunami🚀

• Background : The US slashed interest rates to near zero, leading to a massive influx of capital into Hong Kong; local supply is limited.
• House price trends : House prices have continued to rise from the low point in 2009 to 2018, with a cumulative increase of more than 3 times.
• Insight : The flood of funds and insufficient supply have pushed the real estate market to a record high.

2019–2022: Adjustment under multiple shocks📉

• Background : The social events of 2019, the COVID-19 pandemic of 2020, and the economic setback; coupled with the gradual increase in interest rates in the United States.
• House price trend : House prices have fallen by about 10% to 20% from their highs.
• Significance : The combination of unexpected events and the macro environment has caused the market to weaken.

2023–2024: High interest rate pressure continues ⚠️

• Background : The United States has raised interest rates aggressively, and Hong Kong has followed suit; mortgage pressure has increased and transaction volume has shrunk.
• Property price trends : Second-hand property prices fell further, with some housing estates returning to the 2016-2017 level.
• Inspiration : In a high-interest environment, it is difficult for the real estate market to launch a new upward trend.

🧐 What can we learn from historical data?

1. Alternating up and down cycles : The property market cannot rise forever. Usually after a big uptrend, there will be an adjustment period.
2. Interest rates are key : Behind every major market crash, there is pressure for interest rate hikes.
3. Economic confidence is important : When the social atmosphere is depressed, no matter how low the interest rate is, the property market will find it difficult to take off.
4. Long-term holding has advantages : Although there has been a sharp drop in the short term, in the long run, housing prices are still several times higher than they were 30 years ago.

💡 Editor's Tips

• Don't blindly chase high prices : History tells us that after entering the market at a high point, you may face a market decline for several years.
• Pay attention to macroeconomic factors : US interest rates, Hong Kong economic data, and government policies are all important trends.
• Long-term investment mentality : If you are buying for your own use, you don’t need to worry too much about short-term fluctuations; if you are investing, you need to calculate the cycle.
• Maintain cash flow : Ups and downs are inevitable, and the most important thing is to be able to survive the adjustment period.

📌 Summary

The history of the Hong Kong property market shows us that cycles of growth and decline are natural phenomena. No uptrend can continue indefinitely, nor can any downtrend last forever. Investors and buyers should understand the nature of cycles and avoid excessive optimism or pessimism.

Finally, I want to say this: the property market is like a roller coaster 🎢, with ups and downs. The most important thing is to wear a seatbelt (that is, do a good job of risk management) so that you can enjoy the ride and not be thrown off.