Greenfield Garden Housing Price Index
Greenfield Garden Price Index displays the price index of each individual quarter starting from quarter 2 of 1991. The price index is set at 100 as the benchmark in quarter 2 of 1991.
The price index of each quarter can be commuted until the latest transaction date in quarter 2 of 2017 by using the coefficient of the corresponding time dummy.
Interpretation
- General Trend
It can be clearly observed that the property price in Greenfield Garden is generally in an increasing trend over the past 26 years. Compared to the benchmark index level of 100, the price index has raised to 967.7 in the recent quarter and hit a peak of 1010 at 2017Q2.
- Comparison with general market trend
Generally, the property price trend in Greenfield follow the macroeconomic situation. The peaks and trough can be explained by the remarkable historical economic events.
- Peak from 1995-1997
During the period 1995-1997 June, Hong Kong is under a rapid economic boom. The unemployment rate is substantially lower than the natural rate of unemployment to a historical low of 2.1% in 1997Q2. The interest rate decreased from 10% in 1995 to 8.5% in 1997. Over the 6 years from 1991, the property price index of Greenfield Garden has increased for more than 300% at reach its peak of 416 at 1997Q3.
- Trough from 1997 to 2003
From July 1997, the Asian Financial Crisis started to emerged. The financial market was strike at first and the property market followed its collapse subsequently. The situation was worsen by the introduction of “85,000 housing unit policy” that many household has their properties become negative asset and unable to pay for the monthly instalment. The property price index of Greenfield Garden fall from the peak of to 207 in 1998Q4. The property market as well as property price in Greenfield Garden remain at a low level until the further drop by the strike of SARA in 2003. The property price index of Greenfield Garden hit its bottom of 133 at 2003Q3.
- Peak and Tough in 2007-2009
With the end of SARS, the economy and the property market start to recover from the recession with the help of government policies, for example the Individual Visit Scheme and the signing of CEPA had effectively boosted the economy. The property price in Greenfield Garden rise gradually with the general property market. The low interest rate of 7-8% in that period has supported the property price of Greenfield Garden to strike the peak of 282 at 2009Q2. The subprime mortgage crisis and the subsequent economic tsunami had drawn the index back to 237 at 2008Q4.
- Continuous rising from 2009-2017
Since the late 2008, the interest rate had been maintained in an extremely low level of 5%. Upon the recovery from the economic tsunami, the property price of both the general market and Greenfield Garden has surged in pace of more than 10% per annum except for the minor adjustment in 2013-2014 and the recent 2015-2016.
Despite the abovementioned similarity, that the property price in Greenfield Garden was found to outperform the general property market since 1994. The start of outperformance may stemmed from the confirmation of construction of Yung Chung Line, which is the major transportation means in Tsing Yi. Moreover, significant increase in divergence has been observed since 2011. It may due to introduction of Special Stamp Duty (SSD) in late 2010 and Buyer’s Stamp Duty in 2014. The transaction volume was greatly reduced after the introduction of these stamp duties. In fact the transaction volume of properties in Greenfield Garden has dropped from about 350 in 2009 and 2010 to less than 250 since 2011 and further dropped to less than 100 since 2014. The price trend shows that the property price in Greenfield Garden continuously outperform the general market and the trend is expected to continue to go upward. However, a prudent investor should bear in mind that the low transaction volume may lead to the inefficiency of the price index to show the true underlying market value. Possibility of dramatic drop in price in upcoming future should still be considered.