Residential towers rise above Government House in Hong Kong. Despite the government's efforts to cool down the city's housing prices, international property consultants are optimistic about the market, forecasting considerable rises in the fourth quarter and in 2011. Dennis Owen / Bloomberg News

Property consultants see further growth in Q4 and 2011

Despite government efforts to cool down the city's housing market, international property consultants remain decidedly bullish.

DTZ is forecasting another 5-10 percent rise in the fourth quarter of 2010, while Knight Frank LLP sees a jump of 12 percent next year.

"Low unemployment rates, ample liquidity, low interest rates as well as tight supply have all supported the market, which shows no sign of abating," said Alva To, Head of Consulting at international property advisor DTZ, at a media briefing Tuesday.

"While the greater restriction on mortgage loans may affect the purchasing power of some buyers, the residential market should be able to ride on strong fundamentals and expect further growth in prices before year end, from around 5 percent for mass residential and 10 percent for luxury residential," To added.

The Hong Kong government has announced a series of tightening measures to stabilize the city's buoyant property market since April. These include measures such as raising down payment ratios as well as pledging more land made available for housing developments.

However, home prices in Hong Kong have risen about 47 percent since the beginning of 2009, fast approaching 1997 highs, after which the property bubble burst.

"As of August, the price of luxury residential surpassed the historical peak in 1997 and the upward trend is likely to be sustainable in the long term," said To, adding that the rise in that particular segment will spread to mass residential estates.

Sales have been brisk as well, with the total number of transactions in the city reaching 78,000 in the first half of 2010 alone, the highest level for a corresponding period since 1998, according to DTZ. Hong Kong homes sales have also surpassed 10,000 per month for the past 18 months.

According to a report released by London-based real estate broker Knight Frank LLP, growth in the Hong Kong property market will reach 12 percent in 2011. And, despite those figures being a slowdown from 18 percent this year as efforts to rein in property prices have some effect, it is still expected to be the fastest growing property market in the world.

"In almost all cases, the leading Asian housing markets are substantially higher than the levels seen before the credit crisis," Knight Frank's head of residential research Liam Bailey said in a statement.

DTZ's To said other underlying factors will also aid Hong Kong's property market. This includes the mainland's promising economic prospects and its spin-off effects on Hong Kong, and low mortgage rates that are not expected to rise any time soon due to a weak US economy.

For the first three quarters, the number of transactions valued over HK$100 million hovered steadily around 60 to 70 deals per quarter, according to DTZ Co-head of Investment Alvin Yip.

China Daily

(HK Edition 09/15/2010 page2)