Both investors and analysts are finding it difficult to predict the future of the Hong Kong real estate market, despite intense speculation.
- The value of Hong Kong real estate has increased by 20% in one year
- As prices continue to rise, the government wants to boost supply and cool the market
- Volatility in the Chinese stock market adds further uncertainty, as investors sell property to support other assets
The future of Hong Kong property market remains uncertain.
Real estate in the special administrative region has appreciated by 20% in the past 12 months to May, as wealthy Chinese mainland investors continue to enter the market.
The government has curbed speculative measures and is aiming to increase the supply of new property. As it hopes to ease some of the demand and take the heat out of the expansion, three new residential sites will be released in the coming months, with off-market units on sale from September.
However, this may not be enough. Knight Frank expects prices will continue to rise. Its report on the Hong Kong property market states: “The annual private housing supply target of 19,000 flats is considered achievable this year. Despite the rising supply, we expect home prices to continue rising this year, as it will take time for the new sites to be developed into flats.”
The regional property market has been the subject of much speculation recently. Many experts argue the rises have been unsustainable and the bubble will burst some time in the next 12 months.
Furthermore, recent volatility in Chinese stock markets was expected to impact on the property market. It was suggested the typical property would fall in value by as much as 5% in July, as owners discounted units looking for a quick sale.
It remains to be seen whether this unexpected turn of events does manifest into a short-term dip, a much more significant bursting of the bubble or whether, as Chinese equities continue to recover, Hong Kong property prices continue their upward trajectory.