The Hong Kong government must revitalize the secondary residential market to boost supply of homes, which would be the most effective way to solve the city's housing woes, according to global property consultancy JLL.
The secondary residential sector consists of existing homes with previous ownership history.
Property cooling measures imposed on the secondary market in the past few years — including higher minimum downpayment requirements and charging additional stamp duties for those selling a property within three years of buying it — "have failed" to bring property prices down, Joseph Tsang, JLL managing director, said at a Dec. 11 press conference in Hong Kong. Instead, Tsang said, home prices in the special administrative region have been rising rapidly.
Secondary home transaction volumes fell significantly due to the tightening measures, Tsang added. JLL data shows that since 2015, average monthly secondary home sales in Hong Kong have tumbled to below 4,000 units, less than half of the sales figures attained at the peak in 2010.
The cooling measures within the secondary housing sector have pushed buyers to move instead to the primary residential market to seek brand new homes. This strengthened demand has pushed new home prices up steadily, with price records constantly being set in Hong Kong, he said.
"Now is the time [for the government] to review and alter its market-cooling measures," Tsang said.
Tsang estimates there are about 1.2 million units in the secondary market, and urged the government to relax its measures more to unlock this supply and redirect buyers to the secondary market.
"Reviving the secondary market is very important; otherwise developers will be very happy as buyers have no choice [but to opt for new homes] and they can keep raising prices," he said.
JLL figures show that Hong Kong's mass residential capital values climbed 14.4% in the first 11 months of 2017, while capital values for luxury units rose 15.3% in the same period.