Meet the new Boss2012 is shaping up to be a busy year in the political arena. Earlier this year in Australia Prime Minister Julia Gillard beat back a challenge from Kevin Rudd — and gave the Australian dollar a fit. Commodore Vorege Bainimarama lifted martial law in Fiji. In the near future all eyes will be on the 18th National Congress of the Communist Party of China where Hu Jintao’s successor will be named, and on the presidential election in the United States. Whatever happens there, the result is likely to give the American dollar fits too. At least for a few days.

Regardless of how often academics, industrialists and comedians say it doesn’t really matter, political shifts do indeed have an effect on economics and market mood. That can be on a massive scale, like the elimination of the Apartheid government in South Africa (making it politically correct to buy Pinotage), or tiny — and barely noticed.

A few weeks back a select group of Hong Kong residents chose Leung Chun-ying (by a majority that doesn’t come close to the previous election landslides) to be the SAR’s third Chief Executive. So what is the fresh blood in LegCo going to mean for Hong Kong and in particular its sometimes volatile, always crucial property market? Probably not a great deal, at least not yet.

“Based on research from past CEs, Tung Chee-hwa and Donald Tsang, after they came on board volumes fell in the following six to twelve months,” explains Ricky Poon, executive director of residential sales at Colliers International. Monthly residential sales transactions when Tung took office in 1997 sat at around 15,000. In 2005 for Tsang the figure was roughly 11,000. At the six-month mark in both their terms transactions plummeted to fewer than 5,000. Of course, the financial crisis of ’08 affected numbers for Tsang, but Poon expects a similar pattern to emerge this year too. Currently, approximately 8,000 transactions are carried out monthly.

“The main reason is the ‘What are they going to do?’ idea. What’s the new plan? Are they going to change the government or leave it the way it is? It’s actually a very sensitive question and a lot of people are going to adopt the wait-and-see attitude,” says Poon.

Regardless of the minor housing renaissance happening right now, Colliers, DTZ and Centaline among others all predict pricing and rental rate drop-offs this year. The new stamp duty (introduced at the end of 2010), a concerted effort by government to increase residential supply, lowering of loan-to-value ratios by banks and the knock-on effects of the ongoing debt crisis in Europe are making purchasers cautious and refocusing sales on end-users. After a slow few months between June 2011 and January 2012 — a 50 percent decrease in sales over the period — things took a turn for the better in February. The anomaly in that formula: luxury transactions in excess of $80 million remain below the long-term average. Poon thinks the sudden spike has more to do with pent-up buying energy and low mortgage rates offered by some banks early in the year. Naturally, that led to renewed confidence (meaning prices hikes) for sellers, and in turn softening interest by purchasers.

Couple that with a new administration and it brings the investment property market to a near halt. Eighty-five percent of prospective buyers right now are end-users — up-graders, expatriate residents, Mainland residents and industrialists. That begs the question of what kind of environment investors may be looking for. No matter who winds up in the White House in November, things aren’t going to change radically in the US. Democrat or Republican, the country remains a stable, safe haven for wealth and investment, and a major shift in quality of life is unlikely. There’s been a lot of buzz about Leung’s hard-line views and rumours he’s keen to position Hong Kong more like Singapore. Should investors (and residents) be worried about a major sea change? Again, not yet. Knight Frank’s just-released The Wealth Report 2012 has Hong Kong holding steady near the top of the list for desirable investment locations.

“We’ve seen a lot of different institutions, funds, investors come over here, globally speaking. CY is a tough guy, no doubt, but I don’t think he’s going to make big changes,” Poon theorises. “He doesn’t want to be a second Tung Chee-hwa. He doesn’t want half a million people in the streets. I don’t think he’ll make huge changes unless property prices keep going up. Like in 2009 or ’10 — 20 percent, 30 percent.” Based on Colliers’ research, Poon is expecting reasonable corrections of around 10-15 percent in the next nine to 12 months, and 30 percent over the next few years to bring volumes and prices more in line with rates from the late-’90s.

For now all signs point to staying the course. In addition to transactions and prices being off, mortgages are predicted to begin trending upwards, and leasing demand will weaken. The luxury sector will remain quiet: there were zero $100 million sales in February and sales over $10 million were down 65 percent. So it appears the new boss will indeed by like the old boss, with no changes “At least not for six to 12 months,” finishes Poon. “We have to observe [the patterns].” Because those 500,000 demonstrators loom large.