Interpretation of Price Index
The gradual increase from 1991 and reach a peak in 1997
After the implementation of the Sino-British Joint Declaration in 1984, many people have regained trust in the future of Hong Kong. Meanwhile, the Sino-British Joint Declaration also limited the total amount of new land to be granted to 50 hectares a year. With the growing demand but limited land supply, the property price grew up gradually.
A sudden drop in 1997 and a gradual decline from 1998 to 2003
The Asian financial crisis took place in 1997 and shaken the economy of Hong Kong. Stock price and property price dropped significantly and investors generally lose confidence in the market. Moreover, in the same year, the government launched a policy to boost the property supply, which is to maintain a minimum of 85,000 flats supply per year in order to solve the housing problem. Coupled with the financial crisis, the property market faced a serious downturn.
Despite the government has soon launched lots of measures to boost the market, it was seriously hit again 5 years after 1998 by the SARS outbreak. The property market is covered with a gloomy atmosphere and many people’s property turned into negative equity throughout the period. The property price hence dropped to the bottom in 2003.
A gradual increase from 2003 to the present
A gradual increasing trend is observed from 2003 to the present. This could be attributed to the increasing demand of both local and overseas investors and homebuyer, as well as the undersupply of land. Several market adjustments due to government policies are observed throughout the period, which leads to some sudden drops of the housing price. For example, HKMA has tightened the supervisory measures on property mortgage for seven times from 2009 to 2015, the government has launched and revised the Special Stamp Duty, Double Stamp Duty and Buyer Stamp Duty in 2010, 2012, 2013 and 2016. When those policies were launched, the property price was suppressed for a short period and soon they started to rise again. It should also be noted that the global financial crisis in 2008 also attributed to the drop in property prices in 2008.
From present to Future
It is expected that with the surging demand for housing coupled with the limited land supply, the price index of Bayview Garden will follow the upward trend of the overall Hong Kong property market. Yet the rate of increase may be varied by the government’s policy to boost or cool down the housing market. The recent political crisis and unfavourable market atmosphere might further cool down the heat of the property market, resulting in a potential drop in the transaction price.