The Kingswood Villas price index is generated referring to the comparison of property prices from January 1993 to July 2021. Noted that 100 is marked as the base index in January 1993. The property price index in Hong Kong by the Rating and Valuating Department is also included in the same graph as a comparison. The shape of the two curves is similar indicating that the change of property price of Kingswood Villas follows the general trend of that of Hong Kong.
There are three notable periods identified in the graph, namely the sudden increase between 1996 and 1997, the sharp followed by a constant drop between 1997 and 2004, and the slow-down of growth after 2020.
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1. Sudden increase between 1996 and 1997
At that time, Hong Kong was under speedy development. In terms of society, the unemployment rate and the bank interest rate were low (Chen, 2001). In addition to the positive expectation towards the Handover of Hong Kong, citizens were capable and willing to spend their savings in the property market for self-living and investment purposes.
2. Sharp followed by a constant drop between 1997 and 2004
While due to the 1997 Asian financial crisis, Hong Kong experienced an economic meltdown because of the effect of financial contagion. It turned many properties into negative assets that the mortgage was more outstanding than the property. Thus, there was a significant decrease at the end of 1997. Afterwards, the “85000 housing units supply” policy was released followed by the SARS outbreak in 2003. The housing price declined by 70% due to the three consecutive events reflected in the graph.
3. Decelerated growth after 2018
After SARS was eliminated, there had been a constant and stable growth in the property index until 2018. Social chaos followed by the COVID-19 pandemic have led to several times of society shutdowns and severely affected the livings of the citizens. The unemployment rate had raised and citizens’ willingness to purchase property had reduced slightly, causing the slowdown of the growth of the property price index.