Recent figures from one of Hong Kong's largest real estate agencies, Centaline show property transactions hit a five-year low totalling just 108,814 properties which is 33% less than a year earlier.
This is the lowest number of transactions since 2006 when a total of 99,087 deals were recorded. Last year the Hong Kong government imposed higher stamp duty levels, increased taxes and auctioned off land in order to boost supply and regain some control over prices, as the city is regarded as having one of the world's most expensive housing markets.
The government imposed these measures in order to curb speculators from profiting, but now experts think they are hurting the housing market. Not least because mortgage rates are rising and the global economy remains weak.
At the moment prices have only fallen by around 5% since their peak in June 2011. The fall is mainly due to owners being reluctant to sell and transactions are set to remain low in 2012. In December 2011 just 4,301 units were sold which is a reduction of 54% compared to December 2010.
Analysts think prices will largely remain flat, but could fall by around 5% to 10% this year if the Eurozone crisis worsens and government controls remain in place.
Over the last couple of years property prices in Hong Kong have increased dramatically due to a combination of wealthy buyers from mainland China and low interest rates, leaving many ordinary buyers unable to afford inflated prices. This is a situation which unsurprisingly hasn't sat well with many of the city's 7 million residents.
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