Hong Kong’s residential sales market was quiet in July as Government cooling measures continued to have an impact on transactions.
A series of as anti-speculation moves including the doubling of Stamp Duty in February for all transactions over HK$2 million, has had the desired effect on the residential property market.
Investors and mainland buyers have retreated from the market – in fact the proportion of mainland Chinese buyers has dropped from around 30% in October 2012 to only 9.4% in January 2013 (in the Hong Kong luxury market).
In July, prices in the luxury residential sales market dipped by 0.3%, while rents fell by 0.9% month-on-month.
On the supply side, the latest statistics released by the Transport and Housing Bureau show that the number of new flats commencing construction surged 500% quarter-on-quarter, in the second quarter of this year, to reach 6,600 units – the highest number since 2004
Thomas Lam, Director and Head of Research & Consultancy in Hong Kong, said: “Government data show that 70,000 new units could be available in the next three to four years. Of these, about 60% will be small to medium-sized units with saleable areas of less than 753 sq ft, meeting the demand from first-time homebuyers.
“However, residential supply will remain tight in the short term. With various cooling measures remaining in place, we expect the residential market to stay quiet and sales to fall about 10% in 2013. We believe mass residential prices will drop around 10%, while prices in the more resilient luxury sector will fall 5%.”