Hong Kong flops to 47th spot in luxury home price gains in 2018

The stock market rout slashed the growth of posh property prices to just 1.8%.

The prices of luxury residential properties in Hong Kong inched up 1.8% in 2018 which translates to a weak 47th ranking that it shares with Cannes and signals a drastic turnaround from what was once one of the most preferred hubs of the ultra-rich, according to real estate consultant Knight Frank.

Although Hong Kong’s property market has been known to defy the odds and break new price thresholds every year, 2018 marked a significant turning point for the city. “The stock market slid 13.6%, its worst decline since 2011, and interest rate hikes influenced buyer sentiment,” David Ji, head of research for Greater China at Knight Frank said in a report.

Also read: Bull-run finally ends: Hong Kong home prices to fall 15% in 2019

A separate report by JLL forecasts that less than 100 new luxury units sized 1,722 sq ft or above will be completed in the city’s prime districts including The Peak, Southern district, Kowloon Tong, Homantin and Mid-Levels.

Hong Kong also ranks with cities like Auckland, Beijing, Guangzhou, Shanghai and Vancouver where stiffer regulations were put in place in an attempt to rein in prices. As a result, these cities only saw single-digit growth in luxury home prices.

“As we learn to live without the ultra-low interest rates that have supercharged real estate markets globally since 2008, lower price growth is an inevitable consequence of the shift in monetary policy,” the report’s authors noted.

Despite the ongoing property downturn, the luxury segment is proving to be more resilient than the weakening mass segment. In fact, capital values in the mass residential property market having retreated by 4.2% since peaking at the end of August 2018 whilst capital values for the luxury segment, stayed largely flat in Q4 2018.

This trend can also be observed in the previous market downturn in 2016 when capital values in the mass segment fell by 10.1% whist the posh market segment saw a more controlled decline of 1.9%.

Close regional competitor Singapore managed to snag a spot in the top ten at seventh place as luxury home prices rose 9.1% in the Lion City even as the property market deals with its own round of cooling measures that kicked into effect in July 2018.

In a surprise development, the Philippine capital Manila nabbed the top spot as posh home prices surged 11.1% followed by Edinburgh where luxury residential prices rose 10.6% after nearly a decade of subdued growth. Berlin comes in at third place with 10.5% whilst Munich and Buenos Aires are tied at fourth spot with 10% price gains. Mexico, Boston, Madrid and San Francisco round out the top ten