Hong Kong prices expected to keep rising as supply issues continue
If housing is to become more affordable in Hong Kong the number of new homes being built needs to increase, according to officials and real estate experts.
Although the Government has promised to make more land available, supply is expected to be short for some time and therefore prices will keep rising in what is already one of the world’s most expensive property markets.
Prices edged up 0.69% in June compared with the previous month, according to figures from the Rating and Valuation Department, and although this was the smallest rise since December 2016 prices are still 21.6% higher year on year.
Growth is continuing despite cooling measures. Indeed, the Government announced an
eighth round of mortgage tightening measures in May to help restrain soaring value but the lack of supply means demand is not lessening.
Hong Kong’s new leader, Carrie Lam, who took over at the beginning of July has promised to make housing more affordable and Chinese President Xi Jinping has also voiced concern over the city’s property market.
‘Housing and other issues that affect the daily life of the people have become more serious,’ Xi said in a speech on the 20th anniversary of Hong Kong’s return to Chinese rule.
The number of apartments coming to market in the next three to four years will rise to 98,000 units, according to the Transport and Housing Bureau, a record high since these estimates began 13 years ago.
According to real estate consultants JLL the mortgage measures, along with higher stamp duty and lower loan to value ratios have not been helping as, while they aim to make new homes more affordable, they have effectively stifled sales in the secondary market.
JLL’s latest housing market analysis report says that it expects housing prices, buoyed by strong local demand and tight supply, to rise 15% over the next 30 months.
Senior director at property consultancy Knight Frank, Thomas Lam, also expects prices to increase in the rest of 2017 but at a lower rate of 2% to 3%. He is also forecasting further cooling measures.
Ronnie Chan, chairman of one of Hong Kong’s largest developers Hang Lung Properties, said prices will fall as more land is available for new homes but that is unlikely to have an effect in the next 18 months.