Hong Kong Home Prices Nearing Peak, John Swire Chairman Says

Hong Kong home prices, the highest among major global cities, are close to peaking after more than doubling since early 2009, said John Swire & Sons Ltd. Chairman James Hughes-Hallett.

Continued price gains will lead to a “competitive disadvantage,” and property curbs taken by Hong Kong Chief Executive Leung Chun-ying make sense, said Hughes-Hallett in a Bloomberg Television interview. John Swire & Sons controls Swire Properties Ltd., a luxury property developer.

A shortage of housing supply, low mortgage costs, and a buying spree by mainland Chinese have seen home prices shrug off repeated attempts by the government to curb gains amid an outcry over affordability. Prices could fall as much as 20 percent over the next two years, according to Deutsche Bank AG, after lenders last month raised home-loan rates by 25 basis points in response to tighter risk rules.

“We’re at the very top of the market for our global comparison,” Hughes-Hallett said. “If you look at the price equivalent you pay in New York, Paris, London, Tokyo, there should be a price ceiling somewhere very soon.”

A 20 percent price decline is unlikely, he said. Resale home prices will probably fall though it’s too early to measure the impact of the curbs on new properties, he said.

Swire Properties in November sold an apartment in Opus Hong Kong, a building designed by Frank Gehry, for HK$455 million ($58.6 million), or a record HK$68,083 per square foot. John Swire controls about 44.99 percent of Swire Pacific Ltd., according to Swire Pacific spokeswoman Maisie Shun Wah. Swire Pacific owns about 82 percent of Swire Properties, according to data compiled by Bloomberg.

Leung has imposed extra property transactions taxes, raised mortgage down-payment requirements, and accelerated the pace of government land sale since taking office in July.

Hong Kong has the highest home prices among major global cities including London, New York, and Tokyo, according to a report by Savills Plc last month.

Before it's here, it's on the Bloomberg Terminal.