Property prices to drop to a 2.6% growth rate per annum

The government aims to help release 20,000 units every year - almost twice the 9,500 units made available in 2011.

A combination of more land for homes and a pro-supply government could see property prices in Hong Kong come down by at least one-half.

Hong Kong’s residential property prices are due to decline should the new administration of Chief Executive Leung Chun-ying make good on its promise to increase land supply for housing.

Nicole Wong, Regional Head of Property Research at CLSA, said they “. . . expect residential price growth to halve at best” as Leung’s pro-supply government releases more land for residential development and puts in place policies that curb exorbitant price increases.

In his inaugural speech last July 1, Leung reiterated his pledge to increase land supply to ensure affordability for middle-income buyers. The government’s target is to help private developers release for sale 20,000 units every year, which is almost twice the 9,500 units made available in 2011.

As a result residential property prices are expected to drop to a 2.6% growth rate per annum between 2010 and 2020 from the massive 66% rise recorded 2000 and 2012, or an annual rate of 5.2%.

The souring economy continues to dampen demand for housing, however. The Land Registry recorded 8,389 sale and purchase agreements for all building units in June, down 27% on May and 27.7% year-on -year.

The total value for sale and purchase agreements was $54.5 billion, down 16.7% on May and 22.7% year-on -year. Of the deals, 5,886 were for residential units, down 29.5% on May and 34.9% year-on -year

The total value for sale and purchase agreements in respect of residential units was $34.1 billion, down 28% on May and 35.5% year on year.