Pessimism about home affordability overshadows employment optimism

Housing, priced far beyond the means of most people in Hong Kong, is dragging down consumer confidence according to a study conducted in late March.

The study, which interviewed 7,000 people nationwide and was carried out by the City University of Hong Kong and universities on the mainland, Macao and Taiwan, found Hong Kong people were the most apprehensive about their housing prospects, among other things.

Ranking confidence on a scale of 200 which represents complete confidence, the study found local consumer confidence for home purchases was lower at 58.1 points for the first quarter of the year compared to 66.3 points in the previous quarter and 84.6 points in the first quarter of 2009.

The overall consumer confidence index in Hong Kong for the first quarter dropped further to 88.1 points from 88.4 points for the last quarter of 2009 and 90.3 points for the 3rd quarter of 2009.

There's little reason for prospective, first-time home buyers to feel buoyant. Centaline Property Agency Limited Associate Director of Research Wong Leung-sing said prices for middle class housing are expected to continue to rise this year. Creeping inflation could further sour consumer perceptions.

"The traditional way Hong Kong people deal with inflation is to buy property which they will hold on to for some time and this may put more pressure on supply, increasing prices even further," he said.

"While high property prices continued to hammer the confidence of would-be home buyers, Hong Kong people were more optimistic about their employment prospects," associate professor of City University's department of management sciences Geoffrey Tso said.

The survey showed that Hong Kong people's sentiment of employment rose to 99.1 points from 97.7 points for the last quarter of 2009.

The study found the overall consumer confidence levels for the first quarter of 2010 on the mainland and Macao dipped slightly to 92.3 and 82.8 points from 95 points and 86.9 points for the previous quarter, respectively.

China Daily

(HK Edition 04/13/2010 page1)