Confronted with the sovereign debt crisis in Europe and the lacklustre state of the United States economy, the local property market is also going through a challenging period, although some experts suggest it provides a buying opportunity, especially for high-end properties.
Quoting government figures, Midland Realty says the total number of property registrations in Hong Kong last month was 6,579, down 10 per cent from August. Registrations in the primary residential market plummeted 74 per cent from the previous month to 232. The property market was quiet in the third quarter with primary property registrations plunging more than half. Based on statistics collated until late last month, there were 1,695 firsthand registrations for the third quarter, a drop of about 50 per cent when compared with the 3,780 for the second quarter, and the lowest since the first quarter of 2009.
Midland's chief analyst Buggle Lau attributes the drastic fall in registrations to a combination of government directives to tighten the mortgage loan market in June, rising interest rates for mortgages and the lower than expected land auction of a plot at Sha Tin.
The number of registrations in the secondary market fell 40 per cent, from 23,000 in the second quarter to 14,000 in the third quarter, a 60 per cent drop when compared with the same period last year and the lowest since the fourth quarter of 2008.
'In the fourth quarter of 2011, the outlook remains similar, while the secondary property market will most likely record stable growth,' Lau says. He still expects an overall 11 per cent increase for this year, as a result of a low unemployment rate, greater income, low interest rates and high rentals. Experts expect luxury properties to weather the storm better than the mass market.
'Luxury properties are more price-resilient and I don't think the market will plunge unless there is huge trouble,' says Thomas Lam, Greater China head of research at Knight Frank.
'It's not necessary to surrender assets to get cash if you are cash-rich. Residents in the mass market will be more affected than niche markets. I project a stable market for the rest of the year.