Finally working?
Are the government’s attempts to cool the market continuing to work?
| Text : Elizabeth Kerr | Photo : www.thinkstockphotos.com |
I t would seem the government has managed to chalk one up in the “win” column. Early in the year — really early, as in the 7th of January early — The Standard quoted Midland Realty analyst Lau Ka-fai as predicting rental prices would increase this year by around 10 percent, almost a full 10 percent lower than earlier predictions. The rental downgrade mirrors the dropping prices for sales prices across the board since the end of the 2010, when a few final measures were introduced for the year. Sales immediately plunged, and asking prices were slashed in a desperate attempt to lure buyers back into the game. So is this a win for the government’s attempts at curbing speculation and avoiding a bubble?
“It’s hard to call it a win, actually. The economy here is very reliant on the property market and anything that slows that down is not really a good thing,” theorised a Mid-Levels agent off the record. “However, it’s probably good for average home buyers and renters. Slower moving rents are great if you’re in the market, and the stamp duty increase on a lot of entry-level homes isn’t enough to scare away serious buyers looking for first homes,” she said.
Midland’s Lau pointed at owners now holding on to properties and flooding (relatively speaking) the market with rental flats as the root of the rental price slow-down. Ricacorp’s research chief Patrick Chow said it would take a while for the market to stabilise following the activity of December. The Mid- Levels agent agrees, adding, ”The price cuts and slow rent increases is knee-jerking. Will things stabilise? Sure they will, but only after the speculators get out of the game. That was the point anyway. Once sale prices drop a bit, they’ll find a place to settle and owners will start selling again when those buyers that are holding off come back to the table. In very simplistic terms it’s like a sale at Sogo; you wait until you think those shoes have hit rock bottom then you shop. Those shoppers, or buyers in the case of property, are always there, but they’re as opportunistic as sellers.”
Despite the late-year burp, the real estate
market ended the year on a strong note, with an overall 15 percent price increase. For the most part, the fundamentals that drive property are strong: unemployment and interest rates are low, demand is high, and supply is going to remain tight until the government makes good on its summertime promise to increase land supply.
For a change, things look similar in the luxury sector and the mid-market. “There will always be activity it the luxury sector, despite stamp duties. Those fees may mean an initial outlay of considerably more cash, but buyers in that market can make it worth their while in the long run. Again, it comes down to serious buyers versus speculators who do this kind of thing all over the world,” said the Mid-Levels agent.
So what is 2011/Year of the Rabbit in Hong Kong going to look like? Most analysts agree — a lot like 2010. For now the cooling measure seem to be holding up, but that could change on a dime, as things tend to in Hong Kong. Stay tuned.
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