Hong Kong Property Prices Continue To Cool
News Posted On: 17 August 2012
The Hong Kong government’s actions to cool the property market are proving to be very effective, as property prices only rose by 6.7% to the year ending May 2012. In the June the number of sales was down by 34.9% compared to the same period in 2011.
Towards the end of 2010 the government in Hong Kong increased the amount of land available for residential development after prices increased by 31.1% to the year ending March 2010. This was mainly due to an increase in foreign buyers, low interest rates and a lack of new building.
Since then prices have continued to rise, albeit at a slower pace. In 2010 and 2011, property prices rose by more than 20% each year. According to Knight Frank, price corrections of up to 15% for mass residential property and of up to 10% for luxury property are expected to take effect during the next year.
However Deutsche bank AG is predicting property prices could fall by as much as 20% over the next 12 months due to the increase in housing supply. However housing is still in demand in Hong Kong after house completions fell from a four-year high of 13,405 units in 2010 to 9,449 units in 2011. This year the housing supply is expected to increase to 11,888 units, and to 14,928 units next year. Most of the new homes are being built in the new Territories.
The numbers of housing completions had been falling since 2002 as the government owns virtually all the land in Hong Kong and limited the supply of new land for housing. This tight control has undoubtedly contributed to the sharp increase in property prices and led to the government designating 52 residential sites in the 2011-2012 Land Sales Programme.
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Written by Les Calvert
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