HONG KONG: Economists said Hong Kong’s residential property prices will continue to climb in 2011. This comes after property prices continued to hit record highs in 2010.
But they do expect things to take a bit of a breather in the first quarter because of recent government tightening measures.
Hong Kong’s property market showed no signs of slowing down in 2010. During a government land auction, a plot on Ede Road in Kowloon Tong sold for over US$200 million to developer Chinachem.
At more than US$2300 per square foot, it was a record price for sites on the Kowloon Peninsula. Already, mass residential prices have jumped by some 50 per cent since the beginning of last year.
Nicholas Brooke, Chairman of Professional Property Services, said: “Well it’s a continuation of 2009 – essentially a lot of liquidity in the market, low interest rates and very tight supply and a lot of outside investment seeking to find a home in Hong Kong. People recognizing that real estate is an asset class and it should be part of their portfolio if you like.”
Some economists said much of the market continues to be fuelled by hot money from mainland buyers and investors, rather than end-users.
To clamp down on speculation, the government imposed a series of cooling measures including initiating more land sales, capping mortgage-lending, and banning flipping sales contracts.
And towards the end of 2010, it also slapped additional stamp duties of up to 15 per cent on properties that are resold within two years and raised down-payment requirements on luxury home purchases.
Some economists say a bubble has already formed, but they believe the current measures will help to slow down speculation in the market.
“Without further injection of speculative activity in the market, they can hold the bubble to contain as is. And letting the general public positioning power to catch up with the bubble. So that the bubble will not burst in that way,” said Raymond So, Professor of Finance at Hang Seng Management College.
But some market watchers believe residential prices will still rise by some 10 per cent in 2011, and said more land supply needs to be released in order to cool the market.
“We’re in for a cautious period in the new year, up until Chinese New Year and bit beyond while people absorb what the government has done. But I think the reality is that people will see that nothing fundamentally has changed and therefore we will see prices start to rise again probably from April onwards,” said Mr Brooke.
Although analysts said Hong Kong’s property market may be in for a quiet new year, things are expected to pick up after the first quarter. Experts said a correction could be in store at the end of 2012, as banks may raise interest rates to battle inflation.
Does this mean anything to us in the Singapore real estate market? It is time now to invest in some valuable investment property than to hope for the market to crash and only to be more disappointed as many predicted that this would happen about a year back. Till then… Awesome!