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HK properties in high demand despite clampdown
4 Jan

The former British colony is often hailed as having the most expensive property market in the world and with good reason. As if to prove this point, in 2017 a parking spot in a highly sought-after neighbourhood was sold for a whopping HK$5.18m ($664,250).

This price rise shows no signs of slowing down anytime soon, with properties in the autonomous region of China continuing to see strong demand in spite of a Government clampdown to cool down the market and put a reign on rising prices.

According to the Land Registry in 2017, property transactions in Hong Kong stood at 83,815 units. That’s a 14.8% rise compared to the previous year, a clear sign that buyers resisted Government’s capital control measures. Furthermore, the sale of residential units for the year spiked by 32.3% to HK$566.3bn ($72.4bn) compared to 2016’s figure.

In the 12 months ahead, analysts predict that residential prices will continue to rise between 10-20%, putting further pressure on the city’s leaders who had vowed to make homes in Hong Kong more affordable for working class families.

Policies were introduced in late 2016 and 2017 to combat rising prices although some analysts believe this has had the opposite effect.

In November 2016, Leung Chun-ying’s administration at the time raised stamp duty significantly for non-first-time buyers from 1.5-8.5% to 15%. Furthermore, in April last year, Leung’s successor Carrie Lam Cheng Yuet-ngor added a clause that required buyers who make multiple purchases in a single transaction to pay the 15% stamp duty for each property.

Later that year in October, Lam also introduced a pilot "Starter Home" scheme to provide 1,000 affordable flats for middle-class households, however, she conceded that her team does not yet have a solution to rising prices, prompting fears of a property bubble that will soon or later burst.

"The policy measures had made the situation worse," said Denis Ma, head of Hong Kong research at property service company Jones Lang LaSalle.

Ma said that developers' moves to offer lucrative rebates to alleviate buyers' financial burden had offset the cooling measures"The Government should really review their policy", Ma said.

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