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Hong Kong’s Property Market Cooling Down

If you’re considering mohong kong expatving abroad, Hong Kong might not have been top of your list of potential destinations in recent years, amid house price rises and increasing rental costs. However, signs that the market may soon cool down are being tentatively suggested. We recommend that you look at the hotels in Hong Kong as your first stopping point on arrival as you connect with the right people on the ground to look deeper into the property market

Recent financial history

During the financial crisis of 2008, prices for properties in some parts of Hong Kong more than doubled, but the industry is said to be quieting down now, as the government implements a raft of measures to cool the raging market.

Hong Kong is frequently listed among the world’s most expensive destinations for expats to live in, with Lloyds TSB ranking the nation second in terms of the costliest countries, based on figures from 13 nations.

Lloyds’ Cost of Living Index has been developed to guide expats looking to relocate, informing potential movers of affordability differences between nations and cities around the world. Hong Kong is second only to Switzerland, with average house prices being £687,247 and £1,241,198 respectively.

Why buy now?

With interest rates being low and quantative easing pumping cash into Asia, asset prices in Hong Kong have been on the up for a significant period of time, and the government is now taking steps to reduce the risk of the property market overheating.

Recently, the government announced plans to double stamp duty on flats worth more than HK$2m (£170,057) and bring in a 1.5 per cent rate of stamp duty for properties under this threshold. It has been suggested that this move may provide some short-term stability among property transactions.

Once this stability sets in, buyers looking to move to the nation could find they have a brief window during which to bag a bargain, as the stabilising effect is only expected to be short-lived.

Similarly, consumer confidence is growing in the US, and the Hong Kong dollar is pegged to the US currency, so hopes are high that the low interest rates that have had a knock-on effect in Hong Kong may be set to change in America, thus also having an impact in Hong Kong.

The future

Although house prices could cool slightly in the short term, analysts are predicting they will rise again until interest rates go up in the US. Hong Kong’s currency is pegged to the US dollar at a rate of around 7.8, with HK$10 being roughly $1.29 currently.

There is speculation about the future of this pegging system, with some analysts blaming the asset bubbles and rising house prices on the low interest rates brought over from the US, while others have argued that the trends are simply in line with those in other parts of Asia where there is no fixed exchange rate.

Buying vs renting

An alternative to buying a property in Hong Kong is to rent instead, especially since the suggestion was made by the Hong Kong Monetary Authority that mortgage rates could rise by 300 points during the application process to assess whether potential house buyers will be able to repay the home loans they’re seeking to take out.

However, renting is equally as expensive, with the Lloyds index highlighting that Hong Kong is the costliest country in which to rent a property. On average, tenants pay £1,813 each month, compared with the £765 mean figure paid by UK renters.

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