Park Island apartments hit record highs (again)

My last post, park island property prices hit fresh.high, published in November 2017 noted that the price of property for sale on Park Island has followed a relatively constant growth trend since 2009. 

At that time, prices for Park Island apartments had just hit a fresh record level of $9619 psf. Today, prices are around 5% higher, at $10,085 psf (not just for Park Island but for the Hong Kong property market in general).

The most recent property price graph, along with my "back of the envelope" doodles, show where prices might go over the next 4 years. A price level of $13,000 psf by 2022 is certainly not out of the question.

Property Price outlook next 5 years (Park Island, Hong Kong)

As I have mentioned in previous posts, with every year of rising GPD in China, there is an increased cash-pile and consequent increased purchasing power, from the world's second largest economy, with over 1 billion people and a rising middle class, all of whom aspire to own property. 

Hong Kong is already a very densely populated city, with limited land supply, low unemployment, and a tax regime that makes property ownership a very desirable investment. And, for now, (and for the foreseeable future), we also have a very low cost of borrowing. Added to that, we have the "problem" of repeated, massive (almost unbelievable) budget surpluses, adding to a Government cash pile in the trillions of dollars (and growing each year). That money, one way or another, will be spent, and, one way or another, will make its way into the economy. And money, in the economy, of course filters through into asset prices, including of course, property.

All of this is very welcome news for existing owners, who have to a significant extent "secured their futures" (both financially, but also emotionally to the extent that property ownership provides security and peace of mind). For those not yet "on the ladder", the hope of every owning appears to be becoming more distant with each year that passes (a phenomenon which is not just unique to Hong Kong by the way, but exists in almost every major world city). 

Most options that might assist non-owners, will overall likely continue to push up the market further. For example, special loans to first time property owners, reduced stamp duties for first time property owners, or other kinds of incentives will, over time, simply push up prices as they in effect lead to a greater inflow (or redistribution) of government cash into property. Further, various measures designed to give priority to "locals" over "foreigners" will, which each passing year, enable more and more mainland Chinese to buy as locals unimpaired by restrictions on foreigners (as with the passage of time we will see more and more mainland Chinese in Hong Kong quality as locals).

So, in conclusion, its is very likely we will see sustained increases in property prices, both on Park Island, and in Hong Kong, over the coming decade. 

Next post will not be about property prices! - I promise.