Recent global political turmoil, with financial markets enduring the most conflict, has led to 11% pullback from the Hang Seng Index's high of 28,000 points. Heavyweight stocks like Sun Hung Kai Properties and Cheung Kong Holdings have also been corrected by about 10%, while Midland Realty, a leading property agency extremely sensitive to market conditions, has recorded a 13% decline. However, it is the hard truth that the underlying logic of the property market remains intricately linked to the "wealth effect" of the stock market.
The wealth effect refers to the phenomenon where rising stock prices boost investor confidence and purchasing power, which in turn drives the property market more active. Current data models suggest that the Hang Seng Index's performance will directly determine the resilience of property prices this year.
If the Hang Seng Index can stabilize and rebound above 28,000 points, there is a 50% chance that property prices will see a 
moderate increase of 3% to 5%. This reflects a steady release of purchasing power driven by positive news. If the economic environment further strengthens and the Hang Seng Index reaches the 30,000 points, there is a 20% chance that property prices will rise by 5% to 8%, at which point the market will shift from the current "user-driven" to "investment-driven" model.
As for the most optimistic scenario, the Hang Seng Index breaks through 33,000 points which are currently assessed as having only a 10% probability. If it occurs, property prices could increase by 10% or more. If property prices rise by 20% by the end of the year, as a renowned expert prediction, the Hang Seng Index will reach 38,000 points, with a probability of no more than 3%. In Contrast, if geopolitical tensions continue to deteriorate, causing the Hang Seng Index to fall below 25 000 points with a 20% probability, property prices are expected to record a negative growth of 0 to 3%. In this scenario, asset liquidity and resilience will become the lifeline for investors.
In summary, it is importatnt to control your bets and prioritize capital preservation. The current correction in real estate stocks reflects the market concerns about geopolitics. While real estate assets ("bricks") offer a hedge against inflation, investors should not ignore the lagged negative wealth effect of a stock market downturn on the property market. In this situation, investors are advised to adopt a prudent stance and closely monitor the evolving market landscape.
Since the outbreak of the conflict in the Middle East, transaction volume in the ten major housing estates has plummeted by 40% in the past two weeks, averaging only about ten transactions per week. Given that the property market sentiment has weakened following stock market fluctuations, developers have postponed the launch of large-scale projects. They may need to observe the situation for another two to three weeks to adjust their sales strategies accordingly. If the low transaction volume in these ten housing estates persists for another two to three weeks, downward pressure on property prices will increase.
