Local buyers push Hong Kong home prices to new highs as mainland demand slumps

Local buying is the key driver sending Hong Kong home prices to fresh highs, according to a survey, with demand from mainland buyers dropping to a six -year low in the third quarter and likely to shrink further.

Centaline Property Agency figures show that mainlanders buying flats as individuals accounted for 7.8 per cent of sales of new homes costing less than HK$12 million in the third quarter, down from 10.9 per cent in the second quarter and a peak of 35.5 per cent in the third quarter of 2011.

"Mainland buyers will continue to retreat from Hong Kong as their interest in buying has been reduced by the high stamp duties," said Wong Leung-sing, an associate director of research at Centaline. "It indicates that soaring mass-market home prices have mainly been driven up by local demand."

Mainlanders' overall spending on new Hong Kong flats fell to its lowest level since the fourth quarter of 2008, data showed. The survey found that mainlanders bought 8.6 per cent of new homes in the third quarter, down from 12.3 per cent in the second.

"Chinese buyers have virtually withdrawn from the Hong Kong property market," Wong said.

The survey counted all buyers with Putonghua names as mainlanders, he said, pointing out the figure would also include mainlanders who had secured permanent resident status after living in Hong Kong for seven years.