A Buyer’s Stamp Duty and Special Stamp Duty designed to cool rising real estate costs appear to be working in Hong Kong, according to the latest reports from Knight Frank. Residential sales dropped more than 50% in December, although total residential transactions for the year only fell 3%, which seems to indicate the measures were both necessary and helpful. Experts expect the new cooling measures to keep the Hong Kong market in neutral territory, although they will likely also encourage more buyers and developers to reenter the market. For more on this continue reading the following article from Property Wire.
Residential property prices in Hong Kong are expected to remain steady in 2013 despite curbing measures put in place by the government to cool the real estate market.
According to the latest Hong Kong Review from Knight Frank sales have fallen as a result of the reinforcement of the Buyer’s Stamp Duty and Special Stamp Duty towards the end of last year but prices are still strong.
Indeed, residential sales volume plunged 53.3% in December 2012 to 3,286, the lowest monthly level for the whole of the year but luxury residential prices remained stable last month, while mass residential prices increased by 1.2%.
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The report says that low interest rates, an inflationary environment and the strong financial position of landlords, meant that sales involving significant price cuts or losses were scarce.
Over 2012, the number of residential transactions dropped 3.7% year on year to 81,333. Their total consideration, however, increased 2.2% to HK$452 billion, with price rises over the year of 2.7% in the luxury market and 23% in the mass market.
‘Having adopted a wait and see attitude for nearly two months, potential home buyers appeared to have digested the impact of the cooling policies and started to return to the market. Developers also started to regain momentum in launching new projects,’ the report says.
In December, High Place in Kowloon City and The Wings II in Tseung Kwan O, developed by Henderson Land and Sun Hung Kai Properties respectively, were launched with promotional packages to boost demand. In the first few hours of release, all the 50 units launched in The Wings II were sold out for an average of HK$10,688 per square foot, although this was much lower than market expectation. Car parking spaces worth HK$1.38 million apiece were offered to buyers for free.
The residential sales market was also heated up by the launch of Greenview Villa in Tsing Yi, a subsidised housing project developed by the Hong Kong Housing Society (HKHS). Originally planned as a Rent to Buy Scheme project by the previous government, Greenview Villa has since reverted to a Home Ownership Scheme (HOS) project at prices 30% lower than market rate, to help people climb the property ladder. More than 20,000 applications were received for the 1,000 available units in the first two weeks of subscription.
The report also says that the leasing market remained stable in December, a traditionally quiet season. With business expansion by international corporations slowing and demand from expats weakening, rents in the luxury market dropped 6.7% over 2012. However, rents in the mass market grew 17.5% last year, as some potential home buyers shifted to the leasing market amid uncertain conditions in the sales sector.
To meet housing demand, the Chief Executive is expected to announce further measures in his first Policy Address on 16 January 2013. ‘However, supply is still expected to lag behind demand in the short to medium term. We therefore expect residential prices to remain stable in 2013, with only minor corrections,’ the report concludes.
This article was republished with permission from Property Wire.