Hong Kong remains the highest value residential city in the world with average apartment prices at $1,501 per square foot, according to the latest global research. Singapore comes in second, averaging $919 per square foot.
In Hong Kong the recent crazy home-buying activity could lift total transaction values of new flats this year to HK$150 billion, the third highest annual total since 1996, according to leading agent Midland Realty.
According to the agent, the number of transactions in the primary market was 1,139, up 74.2 percent from the same period in August, while sales of second-hand homes rose 19.5 percent to 2,144 and sales of non-residential properties climbed 13.8 per cent to 462.
Furthermore, home sales come despite developers marking up their prices by as much as 20 percent.
The recent buying mania is partly driven by the easing of interest rate expectation last month and high investment demand. Much of the buying spurt has been domestic. According to Bloomberg, only about 4 percent of total residential transactions in August were subject to the buyers’ stamp duty that’s levied on non-residents of Hong Kong.
The current home-buying confidence suggests that Hong Kong residents are increasingly keen to park their cash in property rather than in bank deposits or in the unpredictable equity market.
Experts suppose that the price rises seen recently would not last long, as the supply of new flats is set to increase over the next two years. The projected private supply in 2018 will jump to 20,000, from 16,000 next year.
Endnotes:
1. South China Morning Post: “Hong Kong new flat sales predicted to top HK$150 billion this year”, Sandy Li, 2016, <http://www.scmp.com/property/hong-kong-china/article/2019013/hong-kong-new-flat-sales-predicted-top-hk150-billion-year>;
2. South China Morning Post: “Hong Kong property sales leap 35 per cent as investors join buying frenzy”, Sandy Li, 2016,<http://www.scmp.com/property/hong-kong-china/article/2020072/hong-kong-property-sales-leap-35-cent-invest ors -join-buying>;
3. Bloomberg: “Hong Kong’s one way one bet”, Nisha Gopalan, 2016, <https://www.bloomberg.com/gadfly/articles/ 2016-09-21/hong-kong-s-one-way-bet>;
4. South China Morning Post: “HK land prices rocket as developers return to acquisition spree”, Sandy Li, 2016, <http://www.scmp.com/property/hong-kong-china/article/2010817/hk-land-prices-rocket-developers-return-acquisition-spree>;
5. South China Morning Post: “Cash no longer king as home buying frenzy hits Hong Kong”, Sandy Li, 2016, <http://www.scmp.com/property/hong-kong-china/article/2018666/cash-no-longer-king-home-buying-frenzy-hits-hong-kong>;
6. Property Wire: “Hong Kong is most expensive city to buy a home, Singapore top for rent”, 2016, <http://www. propertywire.com/news/global-news/hong-kong-expensive-city-buy-home-singapore-top-rent/>.
