Hong Kong residential prices are expected to increase by up to 5% next year despite the government’s latest stamp duty measure, according to a report released Monday.
In the second half of 2016, average monthly residential sales in Hong Kong rebounded 55% year-over-year to 6,123, according to the Year-End Residential and Land Market Review 2016 by global real estate consultancy JLL.
A buoyant stock market, post-Brexit capital inflows seeking safe-haven investments and strong pricing in the public land sales market all contributed to the uplift, reported JLL.
Home prices in the overall market rebounded by 9.5% as of October from their in-year lows recorded in May 2016, reversing much of decline recorded earlier in the year to post full-year growth of 1.6%. Luxury property prices stayed largely flat in 2016, reflecting the greater resilience of that market, especially in the very top-end of the market where capital values have remained solid throughout the year, according to JLL.
Following the Hong Kong government’s decision to raise stamp duties across the board to 15% in early November, home sales are likely to take a hit in the short-term, the report said. Nevertheless, JLL forecasts home prices to remain broadly stable and rise by up to 5% in 2017.
“Under the latest cooling measure, residential sales volumes will shrink over the short-term as buyers adopt a wait-and-see attitude. Developers will need to reassess their sales strategies,” said Joseph Tsang, managing director and head of capital markets at JLL.
“But this measure is unlikely to have a huge impact on capital values, given strong pent-up demand, a large number of cash-rich buyers in the market (including mainland Chinese buyers), and still low mortgage rates,” he added.
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