Hong Kong luxury home buyers queue amid talk of last hurrah

Sun Nov 3, 2013 4:04pm EST
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By Yimou Lee and Alice Woodhouse

HONG KONG (Reuters) - In a shopping mall in one of Hong Kong's prime retail districts, more than 100 people wait patiently to take a lift to the sales floors - not to buy luxury bags or clothes, but high-end apartments with price tags of up to $4.4 million.

Foster Lee, a 30-year-old banker, was among the lucky ones who won the chance to buy a unit after a ballot in which more than 1,600 people signed up for just 80 luxury units on offer.

"I was expecting home prices to fall four years ago and they keep increasing. It really hurts," said Lee, who plans to buy one of the flats offered by New World Development and Wheelock & Company Ltd in the prime location near Kowloon West for his family.

Signs on the ground point to a clear pick-up in demand from local and Chinese buyers, thanks in part to steep discounts offered by developers to offset higher stamp duties imposed a year ago to cool prices that have jumped 120 percent since 2008.

The boom was fuelled in large measure by the Federal Reserve's dollar printing campaign, or quantitative easing, to drag the U.S. economy out of the global financial crisis.

It became easy to borrow cheaply, and with Hong Kong's currency pegged to the U.S. dollar the effects of the policy were easily transmitted to the property market.

But now some analysts expect property prices to fall as the Fed is expected to start withdrawing its monetary stimulus some time during coming months.

Regardless, many home buyers, like Lee, have shrugged off recent forecasts of a drop of up to 50 percent in prices over the next 12 months and decided to take a chance.   Continued...

A man descends on an escalator near private housing estates in Hong Kong October 31, 2013. REUTERS/Bobby Yip