Hong Kong’s real estate market is tipped to extend recent falls this year, analysts said last Thursday, as property transactions dived to a five-year low in 2011 after a slew of measures to curb prices.
Leaders in the southern Chinese city have been trying to control prices, which have become a major headache for the government amid growing disquiet among its seven million population over the rocketing cost of owning a home.
The government last year imposed new taxes, raised stamp duty and staged a series of land auctions to boost supply and bring down prices – helping to tame one of the world’s least-affordable housing markets.
A total of 108,814 properties changed hands in 2011, down 33 per cent from 162,739 a year earlier, according to data compiled by one of Hong Kong’s largest real-estate agencies Centaline.
The volume was the lowest since 2006, when 99,087 deals were recorded.
“The policies were meant to curb speculating activities but they are now hurting the market,” said Wong Leung-sing, Centaline’s research head, who also cited rising mortgage rates and weak global economic sentiment for the fall. He said prices fell only about five per cent on average from their peaks seen in June last year – due to owners being reluctant to sell – and he told AFP: “We foresee a downturn in terms of transactions in 2012.”
Official data last Wednesday showed home sales plunged 54 per cent year-on-year to 4,301 units in December.
Buggle Lau, chief analyst at property broker Midland Holdings, said prices were likely to see a correction this year, and the slowdown could turn worse if global economic sentiment weakened further.
“Prices are likely to remain flat overall, there will be a price adjustment – about five to 10 per cent correction,” he told AFP.
“If the eurozone debt crisis deteriorates, definitely it will have some overall impact in the market but what is more important will be the Hong Kong government’s policies.”
Property prices in Hong Kong, famous for its sky-high rent and super-rich tycoons, have surged over the past couple of years due to record low interest rates and a flood of wealthy buyers from mainland China.