Analysts at Knight Frank say Hong Kong residential property prices are surging due to a lack of demand and the government’s cooling measures are no longer having any effect. Overall property prices were up 65.2% for the month in January and experts believe the trend will continue because new properties are not expected to hit the Hong Kong market until 2015 or 2016. Sales were expected to slow for the Chinese New Year, but that is likely only temporary despite shrinking supply and rising prices. For more on this continue reading the following article from Property Wire.
Hong Kong’s residential property sales market rebounded in January as supply continues to lag behind demand, according to the latest analysis report from Knight Frank.
Transactions were up 65.2% month on month overall, while transactions for luxury homes worth HK$10 million plus increased 57.7%.
The recent Policy Address from Hong Kong’s chief executive proposed a series of measures concerning land and housing planning that is aimed at increasing the future supply of private and public housing and did not contain any further tightening measures.
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But Thomas Lam, director and head of research for Knight Frank Greater China points out that although long term housing policy is moving in the right direction new supply will not come online until 2015 to 2016 at the earliest.
‘In the short term, demand will continue to outstrip supply, but the government may introduce further tightening measures should home prices surge again. Therefore, home prices are set to remain stable with upward or downward movements within 5% this year,’ he explained.
Residential sales are expected to slow this month during the Chinese New Year celebrations, but a further rebound is expected from the end of February and the negative impact of cooling measures has worn off.
Developers regained confidence in the market and became more active in launching primary projects. Upper West in Tai Kok Tsui, developed by the Kowloon Development was released at market prices with an encouraging response received. Developers also re-launched unsold projects to absorb the growing purchasing power.
There is likely to be a sharp rise in primary supply after the Lunar New Year, with new projects such as Imperial KENNEDY in Western District, Residence 88 in Yuen Long, The Grace in Tai Po and DUNBAR PLACE in Ho Man Tin all scheduled for release after the holiday.
Lam said that sentiment in the secondary sales market also significantly improved, with record breaking transactions being witnessed and some landlords becoming more aggressive in their asking prices. Taikoo Shing, for example, achieved the record breaking price of HK$20,000 per square foot on saleable area.
Landlords in strong financial positions were unwilling to sell their properties at discount, resulting in fewer units being available, which in turn drove up transaction prices.
This article was republished with permission from Property Wire.