Premium Suburbs Feel Price Pinch
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Premium Suburbs Feel Price Pinch

Affordability constraints, credit crunches and a flood of listings are affecting growth.

By Terry Christodoulou
Wed, Nov 10, 2021 11:51amGrey Clock 2 min

House prices have fallen across 7% of suburbs in the past three months.

This dip is a contrast to the March peak when just 1.4% posted a decline and according to analysts is the work of a surge in new listings, affordability constraints and tightening credit conditions.

Data from CoreLogic indicates mining towns and some regional markets that experienced the strong upswing earlier in the year have also posted the largest drops.

The volatility in these markets has seen prices slump by 10.3% in South Hedland in WA’s East Pilbara region during the past three months.

House prices fell by 4.7% in Millars Well and Pegs Creek in West Pilbara while units were weakest in West End in Townsville where values fell by 6.6%, East Fremantle in Perth a 4.2%.

However, it’s not an issue isolated to the regions with some of the country’s more premium suburbs feeling the punch.

The high end of the housing market – where dwelling values were about $1 million or more.

Since peaking at 3.5% monthly growth in March, the top 25% of the market by value has slowed to 1.5% through October.

By comparison, the middle market has slowed from 2.2% to 1.7% and the lowest segment 1.5% to 1.3% during the same period.

During the three months ending October house prices in the tony suburbs of Melbourne, including Armadale, Mont Albert and Blackburn posted declines of 0.5%, 0.4% and 0.1% respectively.

In Sydney, Waverley, in the city’s coveted eastern suburbs was the weakest premium market with house prices gaining just 0.7% over three months.

According to Eliza Owen, CoreLogic’s head of research, the slowdown is due to affordability constraints and a glut of listings.

“The volatility at the high end of the market, demonstrated by the rapid decline in growth rates, suggests this segment can also expect a larger downturn in property values.”

“The housing market is well and truly past its peak for the current cycle, and it makes sense that as more headwinds accumulate, price increases will continue to slow, and more suburbs may see an adjustment in price,” she said.

“This comes back to borrowing constraints associated with the increased loan serviceability buffer from APRA, as well as banks proactively tightening lending conditions,” Ms Owen added.



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Hong Kong Takes Drastic Action to Avert Property Slump

The city’s real-estate market has been hurt by high interest rates and mainland China’s economic slowdown

By ELAINE YU
Fri, Mar 1, 2024 3 min

Hong Kong has taken a bold step to ease a real-estate slump, scrapping a series of property taxes in an effort to turn around a market that is often seen as a proxy for the city’s beleaguered economy.

The government has removed longstanding property taxes that were imposed on nonpermanent residents, those buying a second home, or people reselling a property within two years after buying, Financial Secretary Paul Chan said in his annual budget speech on Wednesday.

The move is an attempt to revive a property market that is still one of the most expensive in the world, but that has been badly shaken by social unrest, the fallout of the government’s strict approach to containing Covid-19 and the slowdown of China’s economy . Hong Kong’s high interest rates, which track U.S. rates due to its currency peg,  have increased the pressure .

The decision to ease the tax burden could encourage more buying from people in mainland China, who have been a driving force in Hong Kong’s property market for years. Chinese tycoons, squeezed by problems at home, have  in some cases become forced sellers  of Hong Kong real estate—dealing major damage to the luxury segment.

Hong Kong’s super luxury homes  have lost more than a quarter of their value  since the middle of 2022.

The additional taxes were introduced in a series of announcements starting in 2010, when the government was focused on cooling down soaring home prices that had made Hong Kong one of the world’s least affordable property markets. They are all in the form of stamp duty, a tax imposed on property sales.

“The relevant measures are no longer necessary amidst the current economic and market conditions,” Chan said.

The tax cuts will lead to more buying and support prices in the coming months, said Eddie Kwok, senior director of valuation and advisory services at CBRE Hong Kong, a property consultant. But in the longer term, the market will remain sensitive to the level of interest rates and developers may still need to lower their prices to attract demand thanks to a stockpile of new homes, he said.

Hong Kong’s authorities had already relaxed rules last year to help revive the market, allowing home buyers to pay less upfront when buying certain properties, and cutting by half the taxes for those buying a second property and for home purchases by foreigners. By the end of 2023, the price index for private homes reached a seven-year low, according to Hong Kong’s Rating and Valuation Department.

The city’s monetary authority relaxed mortgage rules further on Wednesday, allowing potential buyers to borrow more for homes valued at around $4 million.

The shares of Hong Kong’s property developers jumped after the announcement, defying a selloff in the wider market. New World Development , Sun Hung Kai Properties and Henderson Land Development were higher in afternoon trading, clawing back some of their losses from a slide in their stock prices this year.

The city’s budget deficit will widen to about $13 billion in the coming fiscal year, which starts on April 1. That is larger than expected, Chan said. Revenues from land sales and leases, an important source of government income, will fall to about $2.5 billion, about $8.4 billion lower than the original estimate and far lower than the previous year, according to Chan.

The sweeping property measures are part of broader plans by Hong Kong’s government to prop up the city amid competition from Singapore and elsewhere. Stringent pandemic controls and anxieties about Beijing’s political crackdown led to  an exodus of local residents and foreigners  from the Asian financial centre.

But tens of thousands of Chinese nationals have arrived in the past year, the result of Hong Kong  rolling out new visa rules aimed at luring talent in 2022.

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