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Apartment prices likely to remain high in Hong Kong despite promise of more supply
The Hong Kong government has signalled that it is determined to tackle the imbalance between housing demand and supply and confirmed that it will make residential sites available for construction. This year’s land sale programme will inlcude 29 residential sites and the Hong Kong Monetary Authority has announced a seventh round of cooling measures for the residential small to medium sized apartments market which is likely to reduce transactions in the short term. Most of the enw residential sites are likely to be in the New Territories and provide around 16,000 new homes. Taking into account land supply in general it is expected that some 19,000 units could be provided in 2015/2016, meeting the government’s supply target. According to the latest monthly Hong Kong Review report from Knight Frank prices in the small to medium sized sector have been rising since 2010 despite the implementation of various cooling policies. The international real estate firm thinks the latest measures may affect sales in the coming months but will have a limited effect on prices due to strong demand from first time buyers. For residential properties worth HK$7 million or below, the maxium Loan to Value ratio (LTV) has been lowered to 60% from the previous 60% to 70%. For borrowers buying a second property the maximum debt servicing ratio has been lowered from 50% to 40%. Office sales have also been slow. In February only a few major transactions were recorded, but the report says there were signs of investors returning to the market. Grade A office prices in major business districts have not seen notable growth since the end of 2014. ‘However, rental growth is expected to support capital appreciation and we expect investors to continue to increase their focus on the office sales market this year,’ the report explains. In the office leasing market divergent trends have been seen. On the one hand finance, insurance and medical beauty companies are continuing to expand and driving up office demand. But sourcing and logistic firms face intense competition from cities such as Shanghai and Singapore and prefer to relocate to reduce costs. ‘Looking ahead we believe Grade A office rents on Hong Kong island will continue to increase in 2015, mainly driven by strong demand from companies looking to expand in these areas with limited supply and where vacancy rates remain low,’ it concludes. Continue reading
Prime property market in Dubai sees sales fall
Dubai luxury home prices remain relatively resilient despite a drop-off in sales activity, according to the latest analysis of the Emirate’s residential real estate market. Sales in Dubai’s prime segment, comprising properties worth over AED10 million, hit the lowest level since the end of 2012 in the final three months of 2014, the research document from international real estate firm Knight Frank shows. Despite this however, Knight Frank’s prime residential price index saw a relatively modest fall in the three months to December of 1.2% quarter on quarter, the second consecutive quarterly fall. Indeed an examination of the data shows that these two declines nearly reversed the increases seen in the first half of last year, leaving values just 0.3% higher year on year in the fourth quarter of 2014. Despite the lower level of transactional activity however, the nationalities investing in real estate in Dubai remained diverse. Data from the Dubai Land Department (DLD) shows that, in 2014, more than 140 nationalities bought property in the Emirate. A breakdown of the figures shows that Indians remained the top foreign property investors, spending around AED18.1 billion, while the British and Pakistanis invested AED9.3 billion and AED7.6 billion, respectively. Overall though, the Emiratis spending AED 22.8 billion were the leading real estate investors, accounting for approximately 21% of the total spent last year. Between 2013 and 2014 Indians and Saudis increased their levels of real estate investment in Dubai while the British and Pakistanis, as well as the aggregate of the remaining GCC countries, spent 1% to 12% less. The total level of real estate investment from all other countries also fell in 2014, by almost 5% year on year. An assessment of web traffic to KnightFrank.ae’s website shows that around 44% of the total viewings in 2014 originated from the UAE. But the report points out that a significant proportion of these will have been expats. What’s more, another 18% of those clicking through to Knight Frank’s UAE website were doing so from the UK, while 7% were from India and 4% from the United States. As a proportion of the total, the level of web traffic from Russia also fell year on year in 2014 however, this did not come as a surprise since the rouble has nearly halved against the US dollar, to which the UAE dirham is pegged, since July, making it significantly more expensive for this nationality to buy property in Dubai. Finally, the strengthening of the US dollar and the weakness of the euro also means that demand from European buyers has also begun to wane, in turn adding further downward pressure on residential property prices in Dubai. Continue reading
Vast majority of UK tenants don’t think they can afford to buy
Over 90% of tenants in the UK don’t think they will be able to afford a property as rents continue to escalate and property prices stay firmly out of their reach. The study shows that just 7.5% of tenants feel confident that they will be able to afford to buy their own property in the future despite the government’s recent initiatives like the Help to Buy scheme, the stamp duty changes and the recent Budget announcement on ISA savings. Indeed, according to the research from Property Let By Us, two thirds of tenants believe the government is still not doing enough to help them onto the property ladder. A further 62% of tenants aspire to owning their own home but a massive 87% of tenants feel trapped in their rental accommodation. ‘These stats show that many tenants are still unable to afford to buy a property and believe more should be done to help them,’ said Jane Morris, managing director of Property Let By Us She pointed out that recent research from the Halifax shows that homes in a fifth of local authority districts across the UK have increased in value by more than the average employee's annual wages over the past two years. The vast majority of these areas are in London, the South East and the East. ‘In eight local authority districts across the UK, the increase in house prices over the last two years has outstripped the amount someone would have typically earned over the period by more than £80,000,’ she explained. And she added that according to Rightmove, the average new seller asking price across England and Wales in March was £281,752, some 1% higher than the previous month and £30 below an all-time high recorded in June last year. ‘These price rises have made it much tougher for first-time buyers to get on the property ladder in areas where they are renting. Many tenants are stuck in a difficult cycle of saving just enough for a deposit, only to find that prices have risen out of their reach again,’ Morris concluded. Continue reading
