It has been learnt that the prices of residential property prices in the sphere of Hong Kong is rising yet again although a considerable section of analysts prefer to makes use of the term “bubble up” instead. What is more important is that this rise does follow extensive falls in the second half of 2008 and all these indicate Hong Kong is riding another euphoric wave of property purchases.
If we refer to records, housing market in the realm of Hong Kong was gravely affected by means of the global financial crisis. However following declining 17% (18% in real terms) from June to December 2008, Hong Kong’s residential price index rebounded and rose by 20% (21% in real terms) from last year’s bottom to August 2009 and this has been learnt thanks to the Ratings and Valuation Department (RVD). Reason? One of the several imperative factors has been a huge influx of buyers from mainland China. There is no doubt that the Chinese stimulus package of November 2008 did advance liquidity, and cash-rich Chinese, facing restrictions on making visible capital from China, bought properties in Hong Kong.
Almost all prime areas, especially Hong Kong Island, Kowloon and the New Territories did witness strong price increases in the first two quarters of 2009. The general residential price index in Hong Kong rose 8.3% (8.4% in real terms) in Q2 2009.
What was the role of the Government of Hong Kong? Experts state that involvement of the concerned government did play a great role. There were, in fact, two stimulus packages, in October 2008, and May 2009, which did retain buyer confidence and encouraged sustained spending. The government as well implemented measures to strengthen the financial sector and ensure liquidity.
It has also been learnt that the record-low completions in house construction by private firms in 2008 perhaps also contributed to the rise of house prices.
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