Mass and luxury residential home prices in Hong Kong surged 14.4% and 15.3% respectively, in 2017, according to a report released by global real estate consultancy JLL on Monday. The report forecasts that home prices in the red-hot property market are about to grow another 10% in 2018, or potentially as much as 20%.
A separate report released Monday by New York-based consulting firm Cushman & Wakefield forecasts a 10% growth in Hong Kong home prices across the board in the first half of next year, supported by Hong Kong’s strong economic fundamentals, record-low unemployment rate, greater demand than supply and a booming stock market.
As Hong Kong and China rapidly churn out billionaires, luxury homes are coveted in the city-state, which is ranked Asia’s—and arguably the world’s—most expensive property market. It remained the least affordable city for the seventh consecutive year in 2016, with the ratio of median home price to median annual household income reaching 18.1 times, according to a survey.
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Last month, an anonymous buyer bought two adjacent apartments in the luxurious tower in the Hong Kong gated community of Mount Nicholson in Victoria Peak for a total of HK$1.16 billion (US$148.5 million), setting a new per square feet price record for Asia.
"The Peak will remain as the hotspot for high-end homes," Denis Ma, head of research at JLL, told Mansion Global. "But as the Guangzhou-Shenzhen-Hong Kong express rail link is scheduled to operate next year, we expect to see Kowloon Station attract more mainland buyers in the future."
Sales volume in the past year, on the other hand, has fallen short of historical levels as the government attempts to cool the housing market, according to JLL’s report. The average monthly residential transactions in 2017 are down 55.3% from their peak in 2010.
Hong Kong introduced its 15% stamp duty across the board for non-resident and investment buyers in November last year, but it remains an attractive choice for Mainland China buyers anyway.
"The stamp duty didn’t seem to affect their purchase decisions too much," Mr. Ma said. "Mainland buyers have been involved in many high-profile transactions this year."
The reason it’s still popular: "Most of them still have business in Mainland and they bought places in Hong Kong for their families. Even though they can potentially get something more glamorous in New York or London (with the same price), it’s not really practical for them," he said.
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"In view of recent record highs being achieved in the market and a wave of new supply coming online, we expect the luxury segment of the residential market to continue to perform strongly, lending support to further price growth," said Joseph Tsang, managing director and head of capital markets at JLL.
The JLL report says demand for mass residential properties in Hong Kong will also remain strong, though sales momentum will slow given the strong growth in housing prices this year and expected interest rate rises.