Residential property prices are expected to undergo sustained growth of as much as 50 per cent annually by the end of the decade, according to property agents and analysts. That is substantially less than the projected growth forecast by Vigers Hong Kong chairman Gareth Williams, who last week suggested demand from end-users and investors would push residential prices up 30 per cent in 1997 with prices possibly doubling in 1998. According to Mr Williams, conditions are ripe for a similar increase in prices with homeowners, investors and speculators from China and abroad keen to buy property when there is a large supply shortage. Analysts were not convinced such a sharp increase would materialise. Now anything more than nominal price increases in line with increases in inflation or wages would trigger another round of anti-speculative legislation by the government, they said. 'The Chinese Government wouldn't allow it to happen,' one analyst said. 'They would not want to be blamed for another high increase in residential property prices.' Colliers Jardine residential director Julia Lui Woo Yuen-yee said sale prices would not double in a short period of time. Ms Lui said demand would be held in check due to climbing interest rates and slow growth in the local economy. She said this could help cap runaway prices. Many agents said affordability was another reason why prices would not climb 100 per cent. Analysts estimated local homeowners spent about 40 per cent of their incomes to service their mortgages. Analysts said that given a doubling of prices, no one, except the super rich, would ever be able to afford to own a home. 'Anything can happen,' one analyst said. 'But the demand is not there for that to happen. 'There is not the general optimism and there is not the coincidence of factors today that pushed the market in 1993-94.' Analysts and estate agents said mainland purchases of Hong Kong property would inrease and there would be a shortage of supply and property prices would go up. 'Unless there is a huge influx of money from China, you won't see a huge surge in prices,' one analyst said.
