Hong Kong housing prices
In an interview with this week, Joseph Tsang, the managing director of JLL’s Hong Kong office said, “I expect home prices to drop 10-15 per cent this year and fall another 10-15 per cent next year if the measures are not removed.”
Since 2010, Hong Kong’s government has implemented several measures to curb rising property prices, including doubling stamp duty on properties worth more than HK$2 million and introducing buyers’ stamp duty — the 15 percent tax on purchases by companies and non-permanent residents.
The special stamp duty imposes a levy of up to 20 percent on those who resell their flats within three years, compared with the previous 15 percent levy on sales within two years.
The 30-year industry veteran also noted that the government, which controls land supply in Hong Kong, has made more land available in a further move to cool the market.
“The government is playing the land supply card, ” Tsang said. “The increased land supply will result in increased production of flats, which will come in next two to three years, when interest rates are on the rise. As a result, home prices will fall sharply, ” he added.
IMF Says a Correction is Necessary
Speaking at a press conference on Monday, Rhee Chang-Yong, director of the Asia and Pacific Department of the International Monetary Fund, seemed to be in favour of bringing Hong Kong property prices down, , “Some adjustments are necessary.”
An influx of capital from the mainland and record low interest rates due to US quantitative easing has helped Hong Kong housing become some of the most expensive in the world, more than doubling since 2008. However, an end to quantitative easing, and hikes in interest rates are expected to put downward pressure on prices.
Surge of New Supply to Keep Prices Low
Also driving housing values down have been government moves to increase the land supply. According to new statistics from Hong Kong’s Transport and Housing Bureau, construction work started on 8, 000 new homes in the first quarter of 2014, the highest level since the office began tracking the market in 2004.
The rate of new housing starts was also more than double the 3, 500 flats recorded in the fourth quarter of last year.