Property market buyers and sellers seen adopting wait-and-see attitude

A month after the Hong Kong government unveiled its toughest measures to curb skyrocketing home prices, the market is now at a stalemate as the transaction volume is stuck at an extremely low level while home prices are continuing to stay at record high levels, with both buyers and sellers adopting a wait-and-see attitude. The stalemate is likely to stay for a few months, analysts believe.

According to data released by Midland Reality on Wednesday, home transactions in the key 35 residential estates monitored by the property agency slumped 50 percent to 59 deals in the week after the government's Oct 26 announcement to impose a 10 to 20 percent Special Stamp Duty, or?SSD, on short term home resales within a three-year period and an unprecedented 15 percent Buyers' Stamp Duty, or?BSD, on home buyers who were not permanent Hong Kong residents.

Between Nov 5 and Nov 25 - the second to the fourth week after the introduction of the new housing policies, home transactions rose slightly to 68 and 72, and then dropped to 61 again last week, all well below the 118 transactions registered in the week when the government unveiled its new policies, according to the Midland data.

Midland Residential Chief Executive Vincent Chan said the upgraded housing measures this time are "playing more obvious effects" in comparison with the first SSD slapped by the government in November 2010 to curb short-term property speculation, which then imposed a 15 percent levy on any sale transaction of a property that had changed hands earlier within six months.

Home transactions plunged 60 percent to 80 deals in the first week after the policy was introduced at that time, which, then picked up notably to 119, 213 and 209 in the following three weeks, respectively. Home transactions during the week of the policy announcement was 199, a figure which was surpassed in only two weeks after the first SSD was announced, according to Midland.

But the slumping transaction volumes this time failed to rock current skyrocketing home prices in Hong Kong. The latest Centa-City Lending Index (CCL) that measures overall local secondary residential property prices declined a slight 0.54 percent to 116.17 in the following week after the policy announcement, while CCL Mass index, which tracks only the mass market's home prices, even climbed 0.11 percent to 114.32 during the week, according to data released by Centaline Property Agency.

Charles Chan, managing director of Savills Valuation and Professional Services, said Hong Kong's property market is now at a stalemate as on the one hand potential buyers are waiting for home prices to drop on these new housing measures and on the other hand, home owners are reluctant to cut prices given that new home supplies in the near future remain tight in the city.

"It is still too early to say if the latest SSD and BSD have played out effects this time," Chan told China Daily in a telephone interview. "It may take another two or three months to see which party cannot hold up anymore, and the trend of home prices in the future will decide whether the government measures succeeded or not," said Chan.

Midland's Chan possesses similar views. Expecting the property prices to stay firm while transactions volumes to remain at a lower level, Chan said that suppressed demands may explode again with overall transactions in the city to rebound to 8,000 each month, in case the budget speech by the city's Financial Secretary in February 2013 does not include new housing measures.

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