Housing prices in Hong Kong are expected to increase at a more moderate pace in 2011, after surging in the past two years, as the impact of property measures are starting to take effect, according to property analysts.
Like Singapore and other top cities in China and India, Hong Kong is now facing the risk of a property bubble, as home prices have jumped over 50 percent over the past two years. This prompted the government to increase stamp duties and land supply, as well as tighten mortgage terms.
“The latest measures will put a halt to transactions from people who are thinking of upgrading their flats,” said Joseph Tsang, head of HK capital markets at JLL.
“People will also think twice before selling and that will cause supply to shrink. So while transactions will continue to fall, prices will be supported.”
Overall, home prices are expected to increase by 10 percent, he added, in line with other market expectations.
Meanwhile, mass housing prices would likely increase between 5 percent and 10 percent, as less speculation in the sector was seen, said Paul Louie, regional head of property research at Nomura.
HK’s monthly residential deals would likely decline to between 7,000 units and 8,000 units next year, from 11,500 units this year, said JLL executives.
With the residential market easing in the city-state, commercial property has been a new target for some investors, as Hong Kong rides the growing financial markets, good domestic consumption and strong economic growth.