Hong kong property prices increase

Hong Kong property prices increased in the second quarter of 2012 as sentiment improved and pent up demand drove up transaction volumes, according to Knight Frank.

The firm's Asia-Pacific report found that quarter on quarter price growth jumped from 1.8% to 8.4% in the three months to June. However, this increase in prices has been met by further government policies to cool the market, with the recent announcement of further lending restrictions and ten measures to increase housing supply.

"The impacts of the new lending restrictions could reduce credit to the sector and slowdown price growth through the remainder of 2012," warns Knight Frank.

The economy in China is slowing down, with growth now projected to come in under 8% in 2012, the lowest growth rate since 1999. Despite this, strong drivers of demand for residential property remain.

Shanghai and Beijing however, have notably shown a 7.1% year on year drop in price at the end of Q2 2012, although prices in the affordable segment of the market have continued to increase, indicating real end user demand. 

"It will be interesting to witness whether the new leadership in November continues with the property cooling measures given the slowdown," adds the firm.