Hong Kong property prices have been on a decline, with analysts looking at it going on a steep decline until 2019. However, they do not believe that the prices will continue to crash, due to China's urgent demand for housing. Mainland Chinese investors are believed to be the saving grace of Hong Kong's investments, CNBC reported.
Housing has been economically important for the land-bereft and small island city, where 7.4 million people share limited spaces. Hong Kong had been a former British colony before becoming part of mainland China, in which time home prices have more than doubled. This was largely due to a mix of large inflows of capital, low interest rates, and scarce supply of land and space for housing.
Hong Kong has been cited as one of the housing markets attracting big money investors, but the situation hasn't improved any. This is likely due to correction cycles where prices in the second half of the year fell due to calibration.
There are still a number of factors affecting Hong Kong's housing prices. According to Vietnam News, it is partially affected by the trade tension between the US and China. About 22% of Hong Kong's GDP and a fifth of the labor workforce works for the heavily affected trade and logistics sector. With it affect, the buying power of the populace is severely weakened, which affects their purchase of homes.
This combination of effects is good for bringing residential market transactions down to only 64 transactions. This occurred during the third quarter of this year; for the second quarter, transactions were down by half of the previous quarter's amount. This was also impacted by investor concerns of the possible fallout of the dispute on the performance of the residential market.
These problems are about to be erased, per analysts' belief that Chinese investors are about to shore up Hong Kong's housing woes. In 2012, the government has imposed a duty on non-residents to pay out as much as 30 percent in duty to taxes for buying homes. These buyers will reportedly be well-positioned to buy Hong Kong homes in 2019 when the imposed tax loses power.
Aside from taking advantage of that, buyers will also benefit from lower home prices. Analysts believe that prices will fall by as much as 15 percent, resulting to more purchases coming from non-residents.
