Prices for luxury residential property in Hong Kong are likely to fall over the next quarter as investors turn to commercial properties after the government imposed harsh measures to cool the housing market, industry executives said.
Hong Kong, which has some of the most expensive apartments in Asia and is home to property tycoons such as Li Ka-shing and Lee Shau-kee, has seen luxury home prices exceed 1997 peaks by at least 10 percent.
But property executives said such prices would not be sustained over coming months after the government applied a special stamp duty of up to a 15 percent on properties sold within six months of purchase.
“Short-term speculators and end-users with a tight cash flow situation will be most affected,” Alva To, head of consulting for North Asia at property services firm DTZ Holdings Plc , said at a news conference.
To said he expected luxury housing prices to fall by 5-10 percent in the first quarter.
“There could be some panic selling in January and February,” he said.
Some investors have, in the meantime, diversified their portfolios by buying into office and retail space.
So far in the fourth quarter, luxury residential transactions have made up only 9.8 percent of total real estate deals in Hong Kong, compared with 17 percent in the third quarter, DTZ figures show.
The proportion of office sector transactions increased to 61.2 percent from 42 percent in the same period.
However, over the course of next year, a rebound in housing prices was likely, To said, adding that the degree of growth would depend on whether more cooling measures were announced. He declined to give a specific forecast.
Housing prices, which have risen 50 percent since the beginning of last year, were expected to climb about 5 percent in 2011, moderating from the pace of growth this year and last property services firm Savills Plc said.
“We think price growth will slow a little bit next year compared with this year,” said Simon Smith, Savills’ head of research. “Obviously the perception of policy risk is beginning to increase not just here in Hong Kong, but in mainland China also.”
The views of DTZ and Savills are roughly in line market expectations.
Earlier in December, Jones Lang LaSalle Inc executives said they expected overall housing prices in Hong Kong to rise 10 percent in 2011, while Nomura International saw luxury apartment prices up about 10 percent.
Source : Reuters – 14 Oct 2010