Despite the Hong Kong government’s series of cooling measures, as well as record high property prices and a volatile global financial condition, the city-state’s property market will likely continue its upward swing next year.
Though a short break is expected to be seen in the first quarter due to the effect of the cooling measures, domestic properties are expected to jump 10 percent for the whole of next year, having already increased by nearly 50 percent since last year. This led many property developers to raise anticipation and the government to post a cautionary stance.
At a government land auction this year, a land parcel on Kowloon Tong was sold for more than US$200 million, setting a record price of US$2300 psf for a site on Kowloon Peninsula.
Several economists said a lot of markets in HK continue to be fed by hot money coming from mainland investors and buyers, rather than end-users. However, a market pumped on low interest rates, tight supply and liquidity is a blessing regardless of more government land sales, restricted mortgage lending and other forms of cooling measures.
Some economists also said a property bubble has already formed, but they believe the current cooling measures will help ease out speculation in the market while others stressed that a correction in the market may be seen before 2012 ends, as banks may increase mortgage rates to fight inflation.