Hong Kong Market Update

Market Overview

  • Population: 7 million
  • The meaning of the words ‘Hong Kong’ is ‘Fragrant Habour’.
  • Hong Kong is counted as one of the most densely populated areas of the world.
  • Government pledged to increase supply of land, and as the property prices went through the roof in 2010.
  • The average land cost for all sites sold in government land auction in 2010 was HK$8,082 per square foot, almost being a record price!
  • Forecast for 2011 economic growth of 4.7%

Hong Kong hotter than ever!!!

Searching for one of the most vibrant property markets on the planet today? Look no further than Hong Kong. For example, earlier in 2010, one private residence in Hong Kong's most prestigious area known as "The Peak" sold for an incredible US$1.3 billion!

Government Cooling Measures

With such an influx of outside money coming in (an estimated 20% of flats purchased last year were by Mainland buyers), a growing amount of local complaints finally forced the Hong Kong government to create new restrictions for buyers. These include a Special Stamp Duty, ranging from 5% to 15% on top of the current stamp duty on the short-term re-sale of housing within 2 years.

Hong Kong Monetary Authority lowered the Loan to Value ratio for residential properties worth $8 million or above, to 50% or 60% and for all non owner occupied residential properties of any value to 50%.

The Near Future...?

Hong Kong is currently going from strength to strength with huge capital reserves--currently the world's seventh largest holder of foreign currency reserves at $266 billion. There is low unemployment (just over 4%) and continued demand for property (largely supported by a continued influx of interest from the Mainland). This combined with an increase in land supply means that prices will continue to rise though at a slower rate due to recent government measures. Analysts have predicted house prices to increase by 10%-15% in 2011 .

Expatriates and white collar executives who move to Hong Kong have traditionally flocked to an area in the Central part of Hong Kong known as the Mid-Levels. Yet with continued purchase and rental prices on the rise in this district, one alternative is Clearwater Bay. Rental yields throughout Hong Kong range between 3.9% and 4.2% for Class A properties. This is likely to increase in 2011 if capital values continue to outperform.