The property market in Hong Kong

Concerted measures to cool the real estate market are now taking effect.

8 April 2014, Words by Yolande Barnes

 

Extremely high capital values make Hong Kong by far the most expensive of the 12 world cities in which to rent any type 
of accommodation or to buy a residential property.

But recent concerted efforts by the government to cool the local property markets appear to be beginning to take effect. The ‘3D’ policy, a triple-whammy of Double Stamp Duty, Buyer’s Stamp Duty and Special Stamp Duty, is suppressing housing transaction volumes and forcing vendors to cut asking prices if they have to sell (many don’t and are simply staying put). Luxury transaction volumes in the five main prime districts on Hong Kong island hit their lowest levels since 2000 and the Savills World City Ultra Prime Hong Kong Index recorded falls of 3.4% in the last half of 2013.

Rents have also suffered. The weakening financial sector, caused by regional economic jitters, has contributed to a downward trend. Rents fell by 1.1% in H2 2013 and in the prime rental markets by 4.3%. Banks have been cutting housing budgets for expatriate employees, while stamp duties for sellers have encouraged more investors to let out their stock.

This growing supply has forced landlords to accept lower rents.

The mainstream market, by contrast, has managed to hold up comparatively well. Interest rates remain low and demand from first-time buyers is strong.

Savills expects prime Hong Kong residential values to fall by between 5% and 10% by the end of 2014. With further price falls on the horizon, many purchasers are adopting a wait and see approach, further suppressing sales volumes.

 
 

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