After a flurry of buying sprees in the first quarter of this year, backed by pent-up demand, sales have significantly slowed recently. But leasing transactions remain brisk as more people turn to the rental market.
According to Midland Realty, average private residential rents across Hong Kong picked up about 5.3 per cent in the first five months, on increased demand, to a monthly average of HK$21.15 per square foot, surpassing the peak levels achieved in 1997.
Gary Yeung, director for Hong Kong Island at Midland Realty, says residential rentals have increased steadily over the past few months and he expects to see further growth, though its pace may be slower in the coming months.
'There is strong demand for luxury homes in popular locations such as The Peak, Island South and the Mid-Levels. Larger units, such as four-bedroom apartments, are especially in demand, but supply is very tight,' he says. 'In Kowloon, we see more residential supply available in the market, so the upward pressure on rentals is not so strong.' Yeung says the luxury leasing market has been active, with properties in the rental bracket of HK$80,000 to HK$150,000 a month particularly sought after by tenants such as expatriate executives and senior corporate management.
With uncertainty over housing policies under the new government headed by Chief Executive Leung Chun-ying, and the continued woes of the global economy and the euro-zone debt crisis, Hong Kong's residential market appears to be at a crossroads. Some home-seekers have decided to postpone their purchase plans and switched to the leasing market for fear of any unexpected downturn.
Clara Chu, director of residential leasing at Colliers International Hong Kong, says global market uncertainties have made people more cautious about the future, dampening the home sales market, while business organisations tend to be more cost-sensitive.
'The leasing market is relatively stable, with a lot of lease transactions and movements. We continue to see leasing demand in Island South and other traditional districts,' she says. 'On The Peak, the stock of leasing properties available is rather small and lease transaction volume is low. As a result, luxury rents are still stable there.'
