Property market watchers breathed a sigh of relief as uncertainty cleared after Leung Chun-ying emerged as the winner in the race to become Hong Kong's new chief executive.
Although they remain cautious about the future of the market, they expect the sector to stabilise and some even predict a rising trend in prices.
Lilian Lue, associate director of Hong Kong Sotheby's International Realty, says Leung has yet to provide any substantial details about his housing policy and the market for small to medium-sized units will continue to hold its breath. Luxury properties, however, are different and more resistant to policy changes. She even expects to see record-breaking prices.
'Supply on The Peak and [in] the Southern District is very limited and owners have strong holding power. These areas are also favourites of mainland investors, for whom the sky is the limit as long as they find what they like. That is why we will see more record-breaking prices,' Lue says.
Midland Realty held an opinion poll right after the conclusion of the chief executive election. About 40 per cent of respondents were confident about the market, while more than 35 per cent were moderately confident. In addition, 60 per cent of those interviewed expected the market to stabilise. The poll showed a cautious attitude in the short term, but confidence in the long run.
Centaline Properties notes that transactions at the 10 major residential projects in Hong Kong dropped 34.1 per cent in the last weekend of March compared with the previous weekend.
Property owners were standing even firmer on prices as the supply of units diminished. Some even increased prices or suspended their plans to sell. Negotiations became more difficult as buyers struggled to digest the increased prices.
Shih Wing-ching, founder of Centaline, believes Leung will not revive the plan to build at least 85,000 units a year because it is historically proven that sinking property prices will not do Hong Kong any good.
Shih expects Leung will tighten the regulation of the sale of first-hand private flats and prioritise land resources for public housing and home-ownership schemes. These measures will reduce the supply in the private market and push up prices. Potential demand is real and can continue to fuel the market boom for a very long time.
Eddie Hui Chi-man, a professor in the department of building and real estate at Polytechnic University, has a similar opinion.
He says Hong Kong has experienced several turbulent periods, so the new administration will have learned the lesson and will avoid cranking up the supply of land at once. Leung's proposal to develop the New Territories could also face formidable problems.
Hui says Leung only mentioned a small increase in public housing at an earlier time, but raised an extension to the tax rebate for mortgage users in his election platform. He believes his election is unlikely to bring significant changes. He estimates prices will vary by 5 to 10 per cent this year and are more likely to move up.
Given the vigilance in the market, things are unpredictable, says Ricky Poon, executive director of residential sales at Colliers International Hong Kong. He expects transactions in the second quarter to remain stable or slightly soften.
Donald Choi Wun-hing, managing director of Nan Fung Group, hopes the new government will offer clear, comprehensive information to the market and increase the transparency of land sales.
'Developers have always wanted stability, and we don't want the market to go up or down sharply,' Choi says.