HONG KONG - Hong Kong has seen a surge in mainland
Chinese buying luxury homes in the territory, according to a survey
published as the authorities move to limit inward property investment.
Mainland investors have long been lured by the prospect of residency
in the former British colony, a financial centre and gateway to China
that is run under a different legal system and boasts higher living
standards.
Influxes of mainland investment have contributed to a 20 percent rise
in residential property prices in the last year, city chief Donald
Tsang acknowledged on Wednesday as he announced measures aimed at
cooling the market and alleviating public concern.
In a new
report, real estate agency Centaline estimated that for the first half
of this year 35.1 percent of new home sales worth over 12 million Hong
Kong dollars (1.5 million US) had been to mainland buyers, up from 22.5
percent in the second half of 2009.
The agency, which publishes regular property market surveys,
acknowledged that mainland investment might now be constrained by a move
announced by Tsang that will suspend granting residency to outsiders
who invest in property.
"Some mainland buyers will inevitably be put off by the changes to
the scheme announced yesterday. After all, buying property is a key way
to gaining residency here," said Centaline's managing director for
residential sales, Louis Chan.
He predicted a five percent drop in the number of mainlanders purchasing high-end property.
However any expectations of a more dramatic drop in mainland Chinese
coming to invest in Hong Kong's property market might be misplaced.
Wong Leung-sing, a fellow researcher at Centaline, noted there had
been no move to limit the issuing of residency rights for those making
other kinds of large investment.
"Mainland investors still have a lot of ways of gaining residency in
Hong Kong," said Wong. "They can invest in the stock market for
example.... I foresee the luxury property market remaining strong."
Property prices in Hong Kong have surged nearly 45 percent from their
trough at the end of 2008, while prices of some luxury flats have
returned to, or surpassed, the peaks of the 1997 boom.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> How Chinese laws will affect Singapore
luxuryasiahome on October 15, 2010
With Beijing acting to cool red-hot domestic market, sellers here could benefit from influx of Chinese buyers
Within days of Beijing announcing new measures to cool the overheated
property market, thousands of people have been flocking to housing
shows in big and small cities across China. Strong enthusiasm was seen
in the property shows in Shenzhen, Shanghai and Nanning, though sales
were lower compared with last year.
The Chinese authorities had ordered local banks to demand a
downpayment of at least 30 per cent from all mortgage applicants and to
suspend loans to buyers of third homes on Sept 29.
Following the move, Shanghai, one of the country’s top-tier cities,
issued new rules to limit home buyers to one new apartment and will
impose a revised land appreciation tax soon.
While some analysts foresee a drop in prices in the coming months,
property agents say initial signs suggest buyers are still not taking
the measures seriously. Buyers react relatively calmly this time,
compared with April when they disappeared in a flash.
Is this irrational behaviour or what?
‘Noise’ in the market
Economists have an explanation for this. Almost all of them agree
that an excessively loose monetary policy – with interest rates kept low
for too long invariably leads to asset inflation and this includes
property.
At the micro level, individuals cannot comprehend this. It does not
help that there is a lot of “noise” in the market. Instead they see
rising asset prices – of houses, stocks, bonds – touted as a reflection
of the real wealth being created.
At a seminar on Asia’s property markets last month, a speaker said
exuberance in the Asian property sector is hard to rein in once the
market has accelerated. Despite government cooling measures, he said the
inflow of money from the United States and Europe into Asia will
continue.
On the local scene, we are seeing buyers slowly returning as
developers push out more projects. In the aftermath of the latest
cooling measures, the current market sentiment dictates that developers
either go for sales or prices. The majority appear to go for prices. Not
surprisingly, sales have slowed but are showing signs of improving.
Meanwhile, developers continue to bid for land and secure
redevelopment plots from collective sales even as they know future
supply is growing ever larger. When will it stop? I think not, if there
continues to be reasonably healthy buying.
Although sales of HDB resale flats have cooled, I am still not sure
whether prices have or will correct in the short-term. Looking at the
statistics, the fresh supply of resale flats will get worse before it
gets better.
This number is fixed by the number of flats the HDB has completed
over the past five to seven years. They are available for resale once
the minimum occupation period of five years have been fulfilled.
Is the clampdown on buying of resale flats for investment sufficient
to turn the market? It depends on how big this component was before the
measures were announced. Of late, we have seen some of these monies go
into HUDC flats.
As for the upper end of the private housing market, the enthusiasm is
still missing from this segment although there has been a number of
high profile record-setting buys mostly by foreigners.
This is because there are currently two sets of sellers in this
segment: The developers themselves, and investors who have bought in the
run up in 2007. Then record sales of more than 14,000 units were sold
mostly in this segment.
However, there may yet be a chance that this segment may see better
days in the coming months as Chinese nationals appear to be slowly
making their presence felt in this segment.
This is to be expected as the Chinese authorities introduced more and more cooling measures in their home country.
Official figures show that the number of caveats filed under Chinese
nationals have been rising from 358 in 2008 to 1,052 in 2009 and to
1,127 from January to September this year. As a percentage, excluding
corporate buyers, the corresponding percentages are 2.78 per cent
(2008), 3.38 per cent (2009) and 4.51 per cent (January to September
2010).
Their presence in Singapore and property markets worldwide may rise as the appreciation of the Chinese yuan picks up pace.
As a rule, buyers buy in places where they are familiar with and at
the moment, Hong Kong and Singapore figure very high on their buying
list.
By Colin Tan, head of research and consultancy at Chesterton Suntec International. |