Despite the Chinese government’s best efforts to restrict the growth of the Hong Kong property market, recent reports highlight the fact that prices in the region have continued their dramatic upwards trend, with limited supply keeping demand at an all-time high. The value of homes in Hong Kong rose on average by 23.6 per cent in 2012 – the largest increase worldwide.
It isn’t just Hong Kong seeing such an encouraging surge in prices, with some surprising rises recorded around the world. Turkey saw an increase of over 10 per cent, while South America established itself as the highest performing region overall with an increase of 8.4 per cent on average. America also showed signs of a return to pre-recession form, with US property prices growing by 7.3 per cent in 2012 – the biggest rise since 2006. Prices across the globe rose by 4.3 per cent on average, with Dubai’s 19 per cent price rise placing it just behind Hong Kong.
Although the rapidly expanding Asian markets and thriving Chinese economy go some way towards explaining the standout performance of the Hong Kong property index, the consistency of its growth over the past few years justifies closer study. The region’s reputation as a gateway to Asia, where eastern and western cultures collide, makes it highly attractive to investors from all over the world. As capital pours in, the quality of the shopping, restaurants and transport escalates with it, creating a microcosm of cultured professionals and businessmen packed into one densely populated island.
The Chinese government’s reluctance to allow Hong Kong prices to continue on their upwards trend has led to a rapid succession of policies and regulations, all aimed at slowing down growth. Last year saw lending grind almost to a halt thanks to new restrictions, but this seems to have had little effect thus far. However, new ‘stamp duty’ fees on luxury homes may have a bigger impact, imposing a tax of 8.5 per cent on the sale of homes valued above HK$2 million, in a move that more than doubles the previous fee.
Still, for the time being it looks like the limited availability and widespread requirement for Hong Kong housing will keep prices decidedly high. Fierce competition for new homes on the market, particularly those in especially desirable areas, means that there is little chance of investments here losing value any time soon. The world’s ‘most vertical city’ looks set to keep both its costs and its skyline spiralling upwards – regardless of governmental concerns.
If you’re considering entering this thriving real estate market, you’ll need guidance from the experts. Engel & Völkers have a local office right in the heart of Hong Kong, as well as shops in over 35 countries around the world, so we’re always ideally placed to help navigate you through your international property purchase. Visit E&V HK online to find out more.