The Hong Kong market is losing its investment attractiveness

In accordance with the most recent monthly report, Knight Frank, the volume of residential property sales in the first half of 2013 in Hong Kong dropped 32.1 % year on year.

The report also says that the low volume of transactions this year was registered in April, when there were 3427 sales, according to information from the cadastre.

The drop in sales has caused an increase in Stamp duty on purchase of residential property in two times in February 2013. as well as changes in the law on residential real estate in April 2013. Since the law on residential property requires that providers regularly updated and maintained promotional materials related to the sale of residential property, for sale now, available at least 500 units of real estate, too little for the huge market of Hong Kong.

However, analysts believe that in the coming months will be far more available apartments, due to the fact that developers will strive to meet annual sales in the second half with the aim of launching new projects or re-launch projects after preparation and change of their promotional materials in accordance with the new decree.

Despite the drop in sales in the first half of the year, prices showed no significant changes. According to Knight Frank, after a fall in prices for elite real estate 2.2 % in April, the value has since remained at the same level.

Long-term investors and foreign buyers are staying away from the market, which is dominated by the initial buyer and the ultimate owner. Probably the flow of customers will be 10% lower than in 2012, is also expected to fall in the price of residential property of the middle class in the region of 10%, while prices on more sustainable the sector of real estate will fall by 5%, analysts said knight Frank.

Transactions in the secondary market dropped a substantial 38.8 per cent year on year in the first five months of 2013. However, when the government decided to support the secondary housing market, releasing the so-called “White Form Applicants”, thus excluding the payment of normal premiums when you buy HOS (Home Ownership Scheme) flats, the market was stimulated.

Indeed, data from the land registry suggests that more than 75% of flats sold in June were small or medium in size, costing less than 5 million Hong Kong dollars.

Also, the government announced that the new housing market konkona the presale period for uncompleted flats would be extended from 20 months to 30 months, which will allow the developer to sell unfinished for 10 months earlier, to meet market demand.

The changes, which came into force in July, is not expected to affect the demand and the stabilization of the situation in the property market of Hong Kong, since they can actually increase the volume of transactions.

® Maxim Savitsky. 01.08.2013