Tag Archive | "Hong Kong"

Hong Kong Still May Face Property Bubble

Economists in Hong Kong believe that the Hong Kong residential real estate market may still face a property bubble if prices are not soon corrected. Housing prices once again hit record highs in the latest report.


The financial secretary for Hong Kong has announced that he is closely watching the housing market, and that he will take measures to cool it down if absolutely necessary. Government officials and economists fear that property buyers may get caught up in the pricing growth, and buy properties without fully thinking over their decision.


The government has taken measures to increase the amount of land available for building in hopes that it will help to slow down the growth in housing prices.


Residential real estate prices have skyrocketed since 2009, rising by more than seventy percent. The increase is largely due to the increased number of Chinese buyers, as well as the offering of record low interest rates by lenders. Prices are up by more than four percent thus far in 2012.


Prices had actually fallen during the second half of 2011, which led many economists to believe that Hong Kong was in the clear with respect to the housing bubble. However, the market has quickly turnaround, and now appears to be stronger than ever.


More middle and high-income investors have decided to put their money into the housing market in recent months. Such a decision is likely due to the thought that properties will hold their value better than cash. Investing in Hong Kong real estate also has provided a better return in recent years.

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Global Economic Uncertainty Impacting Property Market in Hong Kong

The residential real estate market in Hong Kong is feeling the impact of the economic uncertainty that continues to sweep the globe. Residential real estate sales were down in the last month by more than eighteen percent.


Both the average and luxury residential property markets are feeling the effects of the troubled global economy. Luxury homes, which at one time avoided the impact of the general economy, experienced a drop in sales by more than seventeen percent.


The office sector of commercial real estate also experienced a sharp decline in the past month, as sales dropped astronomically. Only the retail leasing commercial real estate sector performed well, with international businesses leasing some of Hong Kong’s prime locations.


Rents in Hong Kong have also fallen amidst the current situation of global economic uncertainty. Rents fell by more than one percent in January. Only in two areas of Hong Kong did rents increase during the month of January.


The massive decline in the number of sales in both the residential real estate market, and the office sector of the commercial real estate market is certainly alarming to economists in the region. There is no clear picture as to whether or not the current economic state will continue to impact the region as it did in January.


Many are hopeful that Hong Kong will be able to avoid any further effects, though the performance of the last month will certainly be difficult to overcome. There is hope that the strong performing retail sector will help to avert any further declines stemming from the global economy, but the big picture is still relatively unclear

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Housing Prices Decline in Hong Kong in December

Both residential real estate prices and sales in Hong Kong fell in December of 2011 as a result of what analysts believe to be a reaction to the overall global economic uncertainty.

Home sales fell more than ten percent on average during the month. Some sectors, such as the ultra-luxury properties, fell as much as thirty percent in terms of the number of sales. The decline experienced in December was consistent with the yearly performance of Hong Kong’s residential real estate market. Residential properties experience a forty percent decrease in the number of sales over the past year.

Rents also experienced a slight decline in Hong Kong, as landlords actively sought to reduce the number of vacancies in their rental properties. The average rent fell two and a half percent. Analysts believe that the rent price figures will rise again shortly due to increased demand.

While the residential real estate market in Hong Kong suffered, the commercial real estate market in non-prime areas showed signs of growth. The number of leases signed during the month of December increased from the previous month in this particular sector. The commercial real estate market in Hong Kong’s prime district, however, did not perform as well.

The prime sector of the commercial real estate market experienced an increase in the total number of vacancies, as many businesses opted to move to non-prime areas in an effort to cut back costs. Those actions taken by businesses may be an indication that Hong Kong has been more directly affected by the global economy than otherwise indicated.

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Hong Kong Reevaluating Stringent Property Restrictions

Hong Kong has announced that they plan to cut back on their stringent restrictions within the residential real estate market due to declining prices. The government recently announced that if home prices continue their current decline, they will have no choice but to either loosen, or completely eliminate the restrictions currently set in place.

While the property restrictions had been effective in cooling prices so as to avoid the possibility of a real estate crash, the current threat of another global economic recession is causing housing prices to drop slightly faster and more than expected. Prices have not seen a substantial decline just yet, though Hong Kong officials are watching the market closely. If there is any indication that prices are falling faster than desired, the government will likely take action.

Home values in Hong Kong hit their lowest level in nearly a year according to the data reports from last month. Sales volume figures are also declining as a result of the restrictions. The current policies regarding the housing market were set into place last year after prices saw a seventy percent increase in a short period of time. In order to provide for a price correction, the Hong Kong government imposed new taxes on home sales, and limited access to mortgage loans.

Analysts believe that the Hong Kong housing market will see the average home price drop by fifteen percent in the next year. However, there is a chance that prices could drop by as much as thirty percent due to external factors affecting the market. If the decline in pricing is on the higher end of the spectrum, one can assume that the government will reduce their current restrictions to avoid any further sell-offs and pricing declines.

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Hong Kong Banks Tightening Real Estate Credit

Banks in Hong Kong are set to make a major impact on Hong Kong’s residential real estate market, as mortgage lending is set to become more stringent. Due to Chinese loan demand, and restrictions imposed by bank regulators, the banking industry looks to tighten credit that is reserved for the real estate sector.

Builders and developers and Hong Kong are reacting quickly to the expected changes. They have accelerated home sales, and may even issue new investment shares in order to combat the increasing credit costs. Such actions are important, as many developers may need to refinance in the next two years.

As developers look to rush home sales, there has been a large influx of new homes sold on the market. Pricing has thus become more competitive, and has declined more than fifty percent in the past year alone. Housing prices are expected to continue their decline until 2013, though the overall decrease is expected to be more gradual.

As mortgage-lending restrictions are tightened, it is believed that the number of transactions will decline. Homebuyers will be faced with higher required down payments.

The government and bank regulators believe that government intervention is necessary with respect to lending restrictions, as prices in Hong Kong have reached astronomical levels. The government is looking to avoid a housing bubble, and has opted to take matters into its own hands to correct the pricing nationwide.

Analysts believe that such drastic measures could have an indirect impact on other industries. While housing prices would be controlled, there may be unintended consequences that come as a result.

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Housing Prices in Hong Kong Decline

Residential real estate prices in Hong Kong fell in October to their lowest point since 2009. While Hong Kong’s current economic situation is relatively strong, global economic fears had a significant impact on the sale of residential housing units in the nation.

The impact of the European debt crisis is starting to extend throughout the world, as residential real estate markets throughout the world are beginning to suffer declines due to worries over the possibility of another global recession.

While residential property prices decreased across the board, average flats and homes fell further than luxury homes, as most luxury owners did not opt to sell during the down period. In fact, only those in desperate need to sell were willing to take a loss, driving down their respective market.

The residential real estate market was not the only sector to experience declines in pricing. Rent prices across the board fell during October, as a majority of landlords were more willing to renegotiate the amount that they charge to secure tenants. Luxury rental units saw the biggest decline in the last month, dropping nearly two percent. Other sectors saw rents drop by as much as one and a half percent.

The global economy is expected to continue to impact Hong Kong’s housing market going forward. Depending on the state of the European debt crisis, the housing market continue remain relatively level, or it could experience even further declines. If the outlook is more severe than expected, many analysts believe that both housing prices, and also rent prices could experience strong declines in the coming months.

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Hong Kong’s Luxury Property Sales Falter

Luxury residential real estate property sales in Hong Kong have dropped by more than eleven percent in the past month. The overall sales volume for luxury homes has now reached its lowest level in more than two years.

The decline in sales can be attributed to the decision of many buyers to wait as they watch to see what happens with the stock market, and also the pending housing policy that will be announced in the coming weeks.

The luxury market that has been the hardest has been Hong Kong’s luxury apartment market. Sales in that sector dropped more than sixty-three percent in the last month alone.

Despite the significant declines in sales within the luxury housing market, prices remain fairly stagnant. Prices across all the luxury residential property sectors fell by only a half of a percentage point.

While the choice of many buyers to wait on buying a luxury home has certainly had an effect on the overall volume of sales, so too has the overall lack of supply. In various sectors through Hong Kong, there are not enough luxury homes to meet the overall demand. While a variety of new homes are being developed in the region, they will not be ready immediately in order to match the overall demand.

Because the housing supply remains very limited, many analysts expect Hong Kong’s residential real estate market to continue seeing declines in the overall volume of sales. There is little to no concern regarding the general state of the market, as demand is still very high. Furthermore, the economy in Hong Kong has proven itself to be incredibly strong with a very low unemployment rate.

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Hong Kong Holds the Title for Most Expensive Home Prices

Hong Kong Holds the Title for Most Expensive Home Prices

While the luxury housing market in many countries continues to see improving numbers, there is no place more expensive for the super wealthy than Hong Kong. Hong Kong currently has the most expensive average home prices for billionaires.

With costs as high as ten thousand dollars per square foot, many of the homes owned by billionaires in Hong Kong are smaller than billionaire-owned homes in other major cities. The cost per square foot for a luxury home in Hong Kong is more than double the costs of similar properties in Paris and London.

However, Hong Kong continues to be a very popular housing market for the super wealthy, as they look to take advantage of the global commodities boom. Luxury housing markets around the world are, in general, seeing improving numbers as the wealthiest individuals around the world look to secure save havens amidst great international economic distress.

High prices in Hong Kong, and other major Asian cities are a direct reflection of the state of the continent’s overall economy. In fact, the number of millionaires in Asia is expected to double in the next few years. As such, the luxury housing market in the region will continue to command high prices, as the demand for luxury homes increases.

The luxury residential real estate market with the second most expensive homes per square foot is Tokyo. The Japanese city features homes that cost roughly eight thousand dollars per square foot. Shanghai has also seen exponential growth in the prices of its luxury housing market.

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Residential Estate Market Yields Revisited in Hong Kong

Residential Estate Market Yields Revisited in Hong Kong

The real estate of United States has been referring as a bubble because of the price-to-rent ratio of the residential and commercial property. However, the metrics in the valuation of real estate is rarely judged by the analysts of Hong Kong. Instead of this, they are trying continuously to focus on the affordability ratio which is the most important factor in mortgage rates.

Although, this affordability seems to be appear healthy but it is just because of the low interest rates. The comparison result and situation is the same as in the United States where it has been proved that the low mortgage rates have been helped different housing schemes and they obtained the chance in a very cheap rate by affordability measures (Affordability index result compiled by National Association of Realtors).

However, the S&P Case-Shiller confirms that the fall in price cannot be stopped. And thus increases the chance of housing double-clip. As Hong Kong is a civilized country and growing strongly as compare to United States which is still struggling in this field therefore the result cannot be compared with each other. The term affordability does not mean that the property is undervalued or it will remain good for you to buy it.

You must say thanks to the tightening in China that in particular, the interest rates are growing higher which is showing that the affordability will be going to look worst if the situation remains unchanged. Instead of using price-to-rent ratio, one can go for other substitute which is the reciprocal of price-to-rent ratio or capitalization rate.

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