Property cooling curbs working in China

Many Asian-pacific countries have placed property cooling curbs on their housing and real estate industry as prices climbed rapidly within the past half a decade. Cities such as Hong Kong, Tokyo, Sydney, Melbourne, Beijing, Shanghai and Singapore are facing not only space and housing issues but also rapid inflation and increasing property prices.

Aerial view of suburban neighborhood, Wuhan, Hubei, China on 11th March 2016. (Photo by Jie Zhao/Corbis via Getty Images)

Aerial view of suburban neighborhood, Wuhan, Hubei, China on 11th March 2016. (Photo by Jie Zhao/Corbis via Getty Images)

The Chinese government has been placing curbs upon curbs on their real estate industry, with perhaps conflicting sentiments as the sector accounts for a large part of the country’s economic growth. But housing prices have been skyrocketing at an alarming rate and for the first time in the past few years, the measures seem to be taking effect.

In Shenzhen, currently the country’s hottest market for new homes, property prices have fallen 0.5 per cent after consecutive dips over the past 4 months. In Shanghai, prices fell by 0.1 per cent, also following a 3-consecutive-month decline. While prices remained unchanged in Beijing, the stabilisation is a start to possible price deflation. News of a possible reduction of land release by more than 3 times that released in 2016 could further reign in price increase.

Park yoho venezia Hong Kong propertyThe price-increase in January was reflected in the smallest number of cities in a year. Home prices have fallen in 20 cities while 45 out of 70 cities saw a gain in prices, down from 46 in December last year. Part of the reason could be the curbs placed not only on buyers but also on banks. Some bank branches in major Chinese cities such as Beijing, Guangzhou and Chongqing have recently increased mortgage rates for first-time buyers. China’s central bank is likely to have even stricter restrictions on credit and housing loans put in place, in particular targeting developers and households, in order to prevent a property bubble.

 

Demand for Hong Kong properties continue to climb

Home prices in Hong Kong are escalating despite the government’s attempts to curb the rapid and steep climb.

OneKaiTak1Photo credit: www.onekt.com.hk/

Buying a resale private property from the secondary market has become difficult due to the heavy stamp duties levied by the Hong Kong government on open market homes in an effort to curb rising property prices and a ballooning market. Stamp duties for first-time local buyers are particularly high and the move has slowed down activity in the secondary market considerably. Instead, it has created a demand for new homes in the primary market. Since homes in this market are sold directly by the developers, they are able to adjust home prices according to market demand and requirements, sometimes even offering incentives and discounts.

In the first month of 2016, the demand for new homes fell by 76 per cent. In the same time this year, it rose by 48 per cent. A complete turnaround. With the current lack of interest and activity in the secondary market, developers are  ceasing the current window of opportunity by its neck and adjusting prices according to rising demand. And the demand is high indeed. At China Overseas Land & Investment‘s new residential project situated on the site of the old Hong Kong airport, One Kai Tak, all 188 units were sold out in a single day last month.

OneKaiTak3Buyers may ramp up their buying speed and fervency in the months ahead, as they pre-empt the possibility of the Hong Kong government implementing further curbs on the market, in particular on individuals who sell their properties to purchase new ones.

Hong Kong’s property prices expected to rise further

As one of Asia’s, if not the world’s, most expensive cities to live and work in, it comes as no surprise that the real estate in Hong Kong is one of the world’s costliest.

onekaitak_2

Photo credit: www.onekt.com.hk

Despite the Hong Kong government‘s repeated attempts to cool the market, with implementation of stamp duties and laying down of other purchasing restrictions, property prices in Hong Kong have continued to climb. And things could be heating up even more this year as even Mr Li Ka Shing, the country’s richest man, predicts the market still have room for property prices to climb further. In November last year, private property prices reached a peak unseen since 1979 when the data was made available by the city’s rating and valuation department.

Although there has been some political unrest, mostly civil, in the city and interest rates have been on the rise, there is still space apparently, for slight rise in prices this year. It will not be a smooth ride up, but there will be increments made nonetheless. China Overseas Land and Investment for example has listed the prices of their latest private residential development in the former Kai Tak airport area for almost 20 per cent higher that the same which were sold in August. In a city where liveable land is scarce, developers have been known to pay exorbitant prices for land sites, for example the record ids for sites in the same Kai Tak airport area for US$1.8 billion or S$2.58 billion.

 

Hong Kong’s red-hot real estate calls for new cooling measures

The pace and amplitude of Hong Kong’s rising property prices, in particular over the last couple of years, have seen the authorities taking proactive steps to cool it. Despite a move to increase stamp duties 3 years ago, prices have continued to climb. In September this year, prices surged once more, after 6 consecutive months of increase, to clock at a record high for the year.

hongkongpropertyHong Kong is already considered one of the most expensive Asian cities to live in, and current cost of real estate plus the high standard of living, has placed many housing options out of reach for the average citizen. Now, with experts predicting further price increase for the rest of the year, the Hong Kong government has once again raised stamp duties on property transactions.

Stamp duties will be raised 15 per cent for all transactions, up from the current 8.5 per cent. This change only affects citizens however, as foreign buyers are already paying a 15 per cent stamp duty. This will hopefully deter property flipping for the populous though the wealthy may still transact within the luxury property sector. ManyWi mainland buyers prefer to hedge heir funds in the Hong Kong real estate sector and have thus negated the effect of the Hong Kong government’s properties cooling measures.

The_Mediterranean_Hong KOngTo help the common man secure housing, first-time home buyers will only be charged a maximum 4.25 per cent stamp duty, dependent in the property value. This latest move is one of the government’s attempts to cool the red-hot property market before financial instability sinks in and causes more chaos to their economy.

 

China’s property explosion slows only slightly

There has been fear of a bubble growing in China’s property market but as property prices fell  in some of China’s top and second-tier cities this month, the fears may be slightly allayed as it seems to indicate that the curbs which authorities have put in place are starting to work.

Property analysts have however reported a change in focus for some mainland buyers to Hong Kong as skyrocketing property prices and cooling measures put some off.

HongKong The AltitudeThe property market in China is one of the country’s main source of revenue growth, and while the authorities may want to prevent a bubble from bursting, they are also put to task to keep the economy alive. China’s economic growth of 6.7 per cent in Q3 was largely dependent on its real estate industry. Recent curbs include larger down payments and restrictions on multiple property ownerships. But the low interest rates offered by China banks have kept the buyers coming. Though the rates have remained unchanged since October 2015, it has been cut 6 times prior.

While new home prices in Beijing fell 3.7 per cent and 2.5 per cent in Shanghai, some may consider this a market cooling. But the average new home prices across 70 cities have shown a record surge last month, the highest in 7 years, with a 1.8 per cent rise from August.

 

Property prices in China continue to climb

Earlier in the year, China’s government laid down new regulations in an attempt to avert a property bubble, but if last month’s 33 per cent year-on-year increase in home value is anything to go by, they may have to do a whole lot more to prevent the real estate industry from travelling dangerously down the path of no return.

chinaProperty prices rose 1.2 per cent in August in 70 Chinese cities, not only in major cities such as Shanghai and Shenzhen but also in regional cities. Last year, the Chinese government relaxed rules on foreigners purchasing properties in China, and despite a slowing economy, property prices have continued to rise. Unrealistically? Perhaps. In Shanghai and Beijing alone, prices have risen 4.4 and 3.6 per cent respectively. In Shenzhen and Guangzhou, home values rose as well at 2.1 and 2.4 per cent respectively. Previously, only the first and second-tier cities had to grapple with sky-rocketing property prices, but the effect may have trickled down to cities of various tiers.

Property analysts are certain however, that as long as land supply remains stagnant and loans are fairly easily attained, the rise will continue. Previous curbs have yet to made a significant impact on the industry and as long as supply remains lower than demand, property prices will continue to climb.

The true value of Hong Kong homes?

Property prices in Hong Kong are at a record high, and there are no signs of it letting up anytime soon. Or does there?

From the number of foreclosures on properties surging to a 5-year high, buyers seem to be struggling to cope with high-interest home loans, almost impossible property prices and a weakening economy. Although a property bubble has yet to occur, cracks in the market seem to be showing as the Hong Kong Monetary Authority (HKMA) points to a growing number of homes whose value are lower than their original price tag.

Park yoho venezia Hong Kong propertyBy the end of 2016’s first quarter, 1,432 homes were already under the foreclosure hammer, and their value – a whooping HK$4.9 million (S$852.5 million). As the Hong Kong government has a strictly-regulated banking system and with 7 rounds of property cooling measures already in place, home buyers and investors have been borrowing from unregulated sources such finance firms and real estate developers, some up to 95 per cent.

Analysts are concerned that the household debt is at 70 per cent and more investors and home owners have been using their properties are collateral for other transactions such as stock trading. As the global and local economy shake, they find themselves in deep hot water. What will the near future hold for Hong Kong’s property market? Is a bubble brewing and is there a danger of the 2008 recession?

 

Singapore property market on the mend?

Is Singapore’s property market finally bottoming out? Are current property prices the lowest they can go?

WhitehavenHong Kong and Singapore are 2 of Asia’s most expensive residential property markets, and while both countries’ governments have implemented property cooling measures to help abate the tension, prices remain high. Though Singapore’s property price spike of 92 per cent in the decade between 2003 and 2013 was not as drastic as Hong Kong’s 370 per cent in the same time period, housing cost has increased considerably and was much fodder for debate during the past 2 elections. While home prices have fallen 1.2 percent in Singapore and 13 per cent in Hong Kong since September 2015, the fall will have to be much more drastic for the situation to return to what it was before 2003.

Taking inflation, economic growth and global economics into consideration, property analysts feel that Singapore’s property cycle has almost reached its bottom or turning point as it is in a much more advanced state than Hong Kong’s. Considering the gentle slope of decline in Singapore’s property prices, a sharp rebound seems unlikely. Will there however be a glimmer of hope for a gradual increase upon policy changes and changes in the demand and supply scale?