Hong Kong Property Prices May Have Peaked
News Posted On: 23 June 2011
According to Walter Kwok, former chairman of a Sun Hung Kai Properties Ltd, property prices in Hong Kong could fall by as much as 15% by the end of 2011. A parcel of land in the Peak district which was auctioned off on June 9 received a lukewarm response, which will affect the prices of the finished properties.
There have already been warnings of an asset bubble in the city with the government introducing numerous measures to curb prices, the most recent being on June 10 when deposits were raised for properties costing more than $770,000. The government is planning to add more than 20,000 homes this year, and may put more residential land up for auction.
Andrew Lawrence, a Hong Kong-based analyst at Barclays Capital, feels that prices may fall by 10% to 20% next year and by a further 10% in 2013 due to increased interest rates. This will be good news for those who currently cannot afford to buy in the city. Buyers from other Chinese cities account for a 20% to 30% of property sales, which Kwok feels is a reasonable level especially when compared with other cities like New York and London where the percentage of foreign ownership is higher.
Overseas buyers accounted for around one third of luxury home transactions during the first quarter of this year, according to Centaline Property Agency Ltd, and are exacerbating the problem of land shortage in the territory. The city is still the most expensive place in the world to buy an apartment, according to Savills plc, with prices currently at HK$26,763 per square foot.
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Written by Les Calvert
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