The Hong Kong property market has proven to be nearly uncontrollable as prices continue to spiral up and transaction volume climbs along with it. Residential real estate sales jumped 16.2% in February over the previous month and prices increased among both mass market homes and luxury properties. The new cooling measures include a doubling of the previous stamp duty, even tighter lending restrictions and the adoption of a new land sales strategy for developers that does away with the old application model. Hong Kong officials are hopeful that these new measures will ease transaction volume and price increases in all property sectors. For more on this continue reading the following article from Property Wire.
The residential property market in Hong Kong experienced a roller coaster ride in February as the traditionally quiet season did not see a drop in buying sentiment, the latest monthly report from Knight Frank shows.
It points out that developers sped up their flat sales and overall residential sales increased 16.2% month on month, to 6,307, while mass and luxury residential prices gained a further 3.4% and 0.6%, respectively.
Sun Hung Kai Properties sold more than 500 units in RESIDENCE 88 in Yuen Long and The Wings 2 in Tseung Kwan O, while 360 hotel rooms in Kwai Chung reportedly sold within two days.
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This came against a background of continued concern about potential overheating in the property market and the Hong Kong government imposed further tightening measures on 23 February, doubling the stamp duty rates for property purchases. The new rates apply to both individual and corporate buyers, but do not apply to local first home buyer.
Meanwhile, the Hong Kong Monetary Authority tightened mortgage lending for the sixth time in two years, requiring banks to increase the interest rates in mortgage stress tests by 100 basis points.
‘We believe the new measures will dampen property sales in the short term and luxury residential investors in particular will hesitate due to increased transaction costs when making property investments,’ the report says.
It points out that with no developers having bid for the MTR Corporation’s Tin Shui Wai residential site, the plausibility of the government’s plan to supply 20,000 homes per year was questioned.
To take control of land supply from developers, the government announced plans to scrap the application list system. Instead, from April, it will release a schedule for land sales every quarter.
‘We believe this will help stabilise the market, as the public will have a clearer picture on the number of units available each year. More tightening measures might be introduced, should property prices continue to increase,’ says the report.
‘We therefore maintain our previous forecast that residential property prices will remain stable, with mild upward or downward movement of less than 5% in 2013,’ it adds.
‘Overall demand from end users and long term investors is expected to remain strong. With increased transaction costs, potential buyers will have golden opportunities to purchase quality property, with more room for price negotiation,’ the report concludes.
This article was republished with permission from Property Wire.