City residents less keen on buying properties

Updated: 2011-09-22 07:07

By Li Tao(HK Edition)

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 City residents less keen on buying properties

An old apartment is reflected on a glassed building in Hong Kong. An HKU study says 1.63 million people in the city intend to buy property, 337,000 less than the 1.97 million in the same survey a year ago. Laurent Fievet / AFP

HKU study says sky-high home prices weighing on affordability

Hong Kong residents' desire to buy a property has lessened significantly as sky-high home prices weigh on their affordability, according to an annual survey by the University of Hong Kong.

The study released Wednesday says that some 1.63 million people in Hong Kong intend to buy property, which is 337,000 less than the 1.97 million in the same survey a year ago.

Confidence in buying a residential home also deteriorated further, as 64 percent of respondents believe that they have no hope of owning property in the next 10 years if prices remain high - an increase of 4 percentage points.

Price expectations also soared more than 50 percent to an average HK$3 million per unit compared with HK$1.9 million to HK$2 million last year.

"Compared with last year's findings, more people expected that property prices would drop in the future," said Lawrence Lam, director of sales and secured lending at Citibank, which commissioned the survey, during a media briefing on Wednesday.

Only 44 percent of respondents expect the city's home prices will rise in the next two years while 35 percent forecast prices to decline.

The study was based on a sample of 1,070 cases interviewed from August 15-29. It estimates that about 2.88 million of the city's adults own residential property with an average age of 49.

Joseph Tsang, managing director of Jones Lang LaSalle, said the relatively small number of samples, however, basically display the current state of the property market.

"Hong Kong people always prefer to invest in properties but rising prices and the rising down-payment and mortgage rates are shutting doors to more and more people," Tsang told China Daily in a telephone interview.

Residential property trading activities have slowed since the end of 2010, following the introduction of the Special Stamp Duty and earlier rounds of macro tightening measures. Sale and purchase agreements averaged about 9,200 a month during the first half, down almost 20 percent from last year while speculative activities also softened, the Hong Kong Monetary Authority said in its half-yearly report released Wednesday.

But Hong Kong's rising property prices continued to erode housing affordability with the income-gearing and price-to-income ratios pushing towards their 1997 peaks, the report noted.

Nicole Wong, regional head of property research at CLSA, however, believes that the city's home prices have peaked.

Wong expects overall residential property prices to drop by 5 percent in 2012, with a wider decline in the mass real estate market than in the luxury segment.

litao@chinadailyhk.com

China Daily

(HK Edition 09/22/2011 page2)