26 Oct, 2011
Subject to policy risks, financing difficulties and interest rate hikes, sales activity in the Hong Kong residential market slowed significantly, with the total number of sales and purchases of residential units falling by 28.9% QoQ during the three-month period ending August 2011. The luxury segment experienced a deeper deceleration, with the number of luxury residential sales transactions in the three traditional luxury districts that sold for over HK$20 million, decreasing by 48% QoQ. The new round of mortgage rate hikes further dampened market sentiment and prompted potential buyers to maintain their wait-and-see attitude. It is not just the interest rate increase that eroded buyer confidence but also a general concern about global economic growth ahead. As far as wealthy mainland Chinese buyers are concerned, the market showed signs of broader investor caution over tighter credit conditions in mainland China. The dampened market sentiment resulted in softening demand from mainland Chinese buyers for properties in Hong Kong. The proportion of mainland Chinese buyers in Hong Kong decreased from 30 - 40% in 2Q 2011 to less than 20% in 3Q 2011.