Hong Kong property market shatters price records

World
Europe

Hong Kong’s private home prices broke historic records for the 13th straight month in November, with the ascent showing no immediate signs of ending and analysts expecting the rise to continue into next year.

Private home prices rose by 1.08 percent in November, marking the fastest pace of growth in six months, according to data compiled by the Rating and Valuation Department released on Friday. The index, which began its climb in April 2016, surged 13.1 percent year-on-year.

The city’s flats are ranked the second most expensive in the world after Monaco, according to data from property consultancy Knight Frank, which shows 1 million US dollars would only buy 200 square feet of prime property in Hong Kong, as opposed to 270 square feet in New York or 320 in London.

“Property prices are high and it’s unaffordable for most ordinary people,” said Thomas Lam, a senior director with Knight Frank.

“But right now, I cannot see any major factor that will drastically bring down property prices in the short run.”

Soaring property values have made both purchasing and rentals almost prohibitively expensive, and many are forced into living in tiny cubicles dubbed "coffin homes."/ Reuters Photo.

Hong Kong SAR's Chief Executive Carrie Lam said during an interview last week that the government “has no ways to curb property prices,” adding that while she would do her best to seek more land to boost supply, she has never promised to turn around the price rise.

Major property consultancies expect Hong Kong’s housing market to remain feverish in the coming year and climb a further five to 20 percent.

The government has tried to rein in prices with additional taxes and regulations, which came on top of the de facto central bank’s eight rounds of mortgage tightenings since 2009.

However, JLL Head of Capital Markets Joseph Tsang said the net effect of measures like taxes on second homes has been to discourage buying and selling in the city’s secondary market.

“I think their intention is good...but they’re using the wrong medicine,” Tsang said. “After eight years your fever is still going on, and they just don’t want to admit they gave you the wrong medicine.”

A government report released earlier this month said it would be a “huge challenge” to meet its 10-year housing supply target of 460,000 units, which includes 280,000 public housing units.

Source(s): Reuters