Sky remains the limit for property prices in HK

(MENAFN – Asia Times) Real estate prices in Hong Kong are expected to rise 7% in the second half of this year after rising 6% in the first half, thanks to a potential reopening of the border with the mainland, supplies limited and less impact than expected from a wave of emigration.

The Centa-City Leading Index, a real estate price indicator compiled by the Centaline Real Estate Agency, rose 5.75% to 188.38 at the end of June from 178.13 at the end of last year. The index peaked at 190.58 in June 2019, up from 100 in June 1997, when Hong Kong was handed over to China by Britain.

Since the anti-extradition protests that first erupted in June 2019, the index has been steadily declining along with social unrest. It fell to 174.03 in March last year when Hong Kong was hit by the first wave of the Covid-19 pandemic. It was then floating between 174 and 180 until it started to increase again at the beginning of this year.

Chief Executive Carrie Lam said on a radio show on Sunday that she would unveil her final political speech of her current term in October and that he would focus on defining her vision for Hong Kong’s future, in especially with regard to his government’s efforts in land development housing availability.

However, she said the proposed measures would aim for long-term change and would not be able to alleviate the currently very high house prices in Hong Kong, increase affordability for buyers, or reduce the long line of business. wait for social housing in one year.

Lam told Metro Radio on Monday that if the idea of ​​building apartments on the edge of country parks suggested by his predecessor Leung Chun-ying was feasible, it would have been done a long time ago. She said the government had strong reservations about the controversial proposal due to its complicated administrative procedures.

She also said she had submitted a report to Beijing on a gradual easing of border crossing restrictions and that her government was awaiting guidance.

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Hong Kong Managing Director Carrie Lam speaks at a press conference in Hong Kong. Photo: Vernon Yuen / NurPhoto via AFP

Freddie Wong Kin-yip, chairman of Hong Kong-based real estate agency Midland Holdings, said in a recent interview that real estate prices in the city could rise 13% this year and maintain upward momentum at middle term.

Wong said people planning to enter the market should make up their minds before the Hong Kong-mainland border reopens, which some analysts say will facilitate increased buying from mainland China.

Louis Chan Wing-kit, Asia-Pacific vice president of the residential division of Centaline Property Agency, said sales of new residential properties had received a strong response from buyers in the past two months. Chan said people have become more confident in buying homes with the Covid-19 outbreak contained since June.

People also wanted to buy properties to protect themselves from global inflationary pressures, he said, adding that the Centa-City benchmark would likely peak in July.

New World Development, a listed real estate developer in Hong Kong, said on July 8 that two of its residential blocks in the third phase of Pavilia Farm, a popular complex under construction in Tai Wai, should be demolished and rebuilt like the concrete. of some walls of the two towers did not meet the requirements of the approved design.

The buildings department said it was first informed of the results of failed tests on concrete samples involving Tower Eight in June and had ordered work suspended pending another round of testing. He learned earlier this week that similar issues have arisen at Tower One, where construction has also had to be halted.

Greg Wong Chak-yan, former president of the Institute of Engineers of Hong Kong, said it appeared that some construction workers had mistakenly used the wrong concrete due to poor communication between the workers and their workers. supervisor. Wong said there was no incentive for the contractor to replace the stronger C80 concrete with a regular C45, as the price difference was only tens of thousands of Hong Kong dollars.

A total of 846 apartment buyers in the two towers would receive the properties nine months later than the original June 30, 2023 date due to the incident.

Hong Kong real estate prices continue to climb. Photo: iStock

New World Development said it will pay interest to buyers within nine months of June 30, 2023 at the prime rate plus 2%, which is currently 7%, and some rent subsidies. Based on a real estate price of HK $ 15 million (US $ 1.93 million), a buyer with a cash payment mortgage plan will receive a grant plus interest compensation in the full amount. of HK $ 1.15 million.

While a potential reopening of borders and limited supplies continue to support property prices in Hong Kong, earlier predictions that a wave of emigration hit prices may not materialize, analysts said.

There is still no official data to show how many people have left Hong Kong since the implementation of the National Security Act on June 30, 2020.

According to the UK Home Office, a total of 34,300 Hong Kong people applied for UK national visas (overseas) to settle in the UK during the first quarter of this year.

The visa offers applicants a route to obtain UK citizenship within six years. According to media reports, other people left Hong Kong with Canadian and Australian passports.

Education Secretary Kevin Yeung first acknowledged on July 2 that there had been a wave of emigration to Hong Kong, as several students left their schools this year. Yeung said the exact numbers would be known in September.

A protester holds British Overseas Passports (BNO) during a protest against new national security legislation in Hong Kong on June 1, 2020. Photo: Agencies

Carrie Lam said on Monday that the wave of emigration was not a big deal as those who left would come to realize how good Hong Kong is. She said Hong Kong would recruit talent overseas and on the mainland to compensate for the exodus.

According to a survey published by Midland Immigration Consultancy, around 85% of those planning to leave Hong Kong have not yet purchased property abroad. Of these, only 23% would sell their properties in Hong Kong to pay for living expenses abroad, while 39% would use their savings and 28% would choose to take out more loans.

About 15% of those surveyed had bought a house abroad. Among them, only 14% have sold their properties in Hong Kong. Tina Cheng, director of strategy at Midland Immigration Consultancy, said the recent wave of emigration has not had a big impact on Hong Kong’s real estate markets.

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