In the budget, the Financial Secretary stated that Hong Kong is experiencing a continued upturn in the economy and demand for residential and commercial properties has increased, exerting upward pressure on both property pricesand rent. There are clear reasons behind the heat of the Hong Kong property market.
The budget announced the lowering of the property tax rate by one percentage point to 15% and a one-off 100% waiver of rates for 2008/09, as well as the stamp duty on property transfers, which has remained HK$100 for properties priced under HK$2,000,000 and a maximum of 3.75% on properties priced over HK$6,000,000.
Hong Kong's position as the gateway to China is likely to bring significant economic growth in the future with every indication that this should positively impact on the property market. Major transport infrastructure projects are progressing well, in particular the governments of Guangzhou, Hong Kong and Macao are pushing ahead with preparations for the Hong Kong-Zhuhai-Macao Bridge.
The Hong Kong Government is also concerned about the redevelopment of old urban areas which can release land for better use. As such, bulk acquisitions of existing properties, with a view to either investment or redevelopment, remain an attractive option among developers.
According to research conducted by one of the top real estate market analysts, the demand for residential properties boomed rapidly, with the number of residential sale and purchase agreements for 2007 reaching their highest annual sales figures since 1997. The leasing market for luxury properties remained strong through the fourth quarter of 2007 with demand coming from the ongoing expansion of the banking and finance sector.
On the supply side, there were only 2 residential development sites under the 2007/08 Application List sold during the year 2007. With strong demand and declining stock, capital values were pushed higher by the end of 2007 and will even reach a pinnacle in 2008. The rental market will continue to grow on the back of sustained expatriate demand and a tight supply of leasing property.
Although there is concern with global oil prices, a slow US economy and declining stock markets, as well as further tax cuts on Hong Kong taxes, low interest rates and the 2008 Beijing Olympic event are all paving ways for property prices to climb higher in 2008.
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