Is the Hong Kong Property market back?

There is a notable increases in agents and prospective buyers around this weekend, and the "buzz" of another possible period of property prices increases is definitely in the air. I would not say its a frenzy by any means, but definitely a notable stirring of interest and activity.

And as always, what seems to happen in HK so quickly, is that those sellers who had considered selling only a few weeks ago are putting their asking prices up in response to buyers who are now looking to get "back in", sensing that prices are moving back up.

Are we really back into upward movement in HK property prices? Possibly. 

Certainly, the outlook for interest rates increases is becoming increasingly subdued. A 25bps increases, whether it comes in December or some time in 2017 will be easily absorbed by the HK property market, except perhaps to some extent, the high end luxury market. 

Supply is still very limited, with the big increase in supply "promised" by CY Leung not having become reality. 

And in terms of the so called "spicy measures", whilst in theory even more could be done to cool the market, I think its very unlikely anything further is done. 

Right now, the HK property market is one of the most under-leveraged in the world, as a consequence of the extreme lending restrictions enforced on banks in Hong Kong who offer mortgages to buyers, which was imposed because HK does not have the ability to raise interest rates (due to the HK/USD peg).

China is still growing fast (although at a slowing rate). 6% GDP growth, off a massive base for a country like China equates to billions of dollars (or rather RMB) and a huge amount of Chinese money still makes its way to HK, with many Chinese people aspiring to get money out of China and to own properties in HK, and others seizing on this time of political uncertainty to acquire property from HK locals.

The economy right across the boarder in Shenzhen is booming, as are property prices. Indeed in first tier Chinese cities, including Beijing and Shanghai, prices are at record levels and continue to rise.

Below is the latest price graph for property across Hong Kong. I believe we will see increases continue over the next 3 months at least. (If there was a graph summarizing the performance of all first tier cities in China, I think the graph would be even steeper, with HK being the laggard).

Hong Kong Property Prices - making a comeback?

I'll comment soon specifically about my thoughts on outlook for Park Island property prices. Whilst we are definitely affected by overall market trends, there are also some unique factors that apply specifically to Park Island that need to be considered by buyers, sellers, tenants, and potential owners.