Hong Kong will likely see the largest worldwide increase in housing prices in 2011, as values settle at more sustainable levels and a “post-crash bounce” eases off, said property broker Knight Frank LLP.
Growth in Hong Kong may slow to 12 percent next year from this year’s 18 percent, as government efforts to rein in the market begin to bite, said the London-based adviser in a report.
Authorities in Hong Kong are attempting to slow down the growth of property prices in order to avoid a bubble driven by demand from wealthy mainland Chinese buyers and record-low interest rates. The Asia-Pacific region has led a global housing recovery since last year, with values less affected by the recession compared in Europe and the US.
“In almost all cases, the leading Asian housing markets are substantially higher than the levels seen before the credit crisis,” said Liam Bailey, head of residential research at Knight Frank, in the statement. “Industry experts in Asia seem to feel that the continent cannot escape weakening market conditions.”
Meanwhile, Knight Frank expects to see a 5 percent increase in average home prices next year, down from 6.5 percent growth this year. Singapore and Australia, which rely on Hong Kong and China for trade, are expected to see the same slowdown, added the broker.
Buyer demand in Canada, France and the UK, which have benefited from an 18 month growth due to government economic stimulus and low borrowing costs, will probably be curtailed by prospects of higher interest rates, tax increases and public spending cuts. These three countries will not probably see more than 2 percent growth in prices in 2012, said Knight Frank.
US prices are expected to remain “relatively static” in the next 18 months, after a 31 percent slide from the peak in mid-2006, it added.