From his tiny agency near the Luohu border crossing between Shenzhen and Hong Kong, real estate broker Fong Kai-yueng has had an ideal vantage to witness the shifts in the cross-border property market over the last 27 years.

"Fifteen years ago, I was still focusing on taking Hong Kong buyers all over Guangdong Province to buy homes," Fong told the Global Times. "Those days are long gone. Now, nearly 90 percent of my commissions come from taking mainland buyers to Hong Kong."

For example, Fong said he earned more than 1 million yuan ($158,723) in commissions over a weekend before the Spring Festival after he sold four luxury apartments near Admiralty in Hong Kong. That's a significant payday for one weekend of work, considering that his agency earned about 15 million yuan last year.

Fong said his business survived only because he began shifting his client base to mainlanders 15 years ago.

As real estate transaction volumes among Hong Kong locals have sputtered in recent years, real estate brokers and developers have rolled out the red carpet for cash-loaded mainland buyers.

According to a report released by Hong Kong-based Midland Realty in January, buyers from the Chinese mainland accounted for 19.2 percent of home purchases in Hong Kong in 2011, an all-time high representing an annual increase of 8 percentage points. "As China tightens its home-buying regulations, a lot of hot cash is flowing into the Hong Kong market," said Wong Leung-sing, research director for Centaline Property, one of the region's largest real estate agencies.

House arrest

According to Hong Kong Special Administrative Region's (SAR) Land Registry, the number of properties that changed hands in 2011 fell 33 percent year-on-year to 108,814, a five-year low. Furthermore, the value of these properties dropped 14.7 percent to $587.89 billion.

Wong at Centaline Property said that most brokers in the Hong Kong housing market are now vying for mainland buyers. "Mainland buyers are mostly interested in luxury apartments in downtown areas, which are quick to sell," he said.

The Midland Realty report said that mainland buyers bought 52 percent of new luxury homes and more than 25 percent of the second-hand luxury homes in the city. Luxury homes are classified as those priced between HK$5 million ($644,843) and HK$10 million.

Meanwhile, on the Chinese mainland, more than 40 major cities, including Shanghai, Beijing and Shenzhen, have prohibited local families from purchasing a third apartment. Non-locals are limited to one.

"The mainland restrictions on property investment are the main reason for the influx of capital into Hong Kong's housing market," Wong said. "If the central government loosens its grip, a repatriation of capital is inevitable."

However, it is unlikely the central government will loosen restriction in the coming year.

Jiang Weixin, minister of Housing and Urban-Rural Construction, said on January 30 that the ministry is working on a project to link databases of personal housing information in 40 major cities by the end of June in order to further curb speculation on the housing market.

Few limits

Gu Jie recently spent 11.8 million yuan on a 150-square-meter apartment in the Mid-Levels on Hong Kong Island, a 15-minute walk from the downtown Central area. The Shenzhen woman said that buying in Hong Kong is a bargain, especially since the yuan is trading at a record high against the Hong Kong dollar. "It's as if you get a 20 percent discount just for buying in Hong Kong," she told the Global Times. "And in Hong Kong, we don't have to worry about unexpected policy changes that might cause the price to slump."

According to the city's land registry, prices for luxury homes in Hong Kong have grown 45 percent since 2009. Hong Kong's overall real estate market, however, remained sluggish in 2011, though property values have grown steadily since the bottom fell out of the market in 2008.

Hong Kong residents have a mixed view about the surge of mainland buyers. Some people think it is a natural development of a market economy, while others believe it has made housing prices more expensive for locals.

Nonetheless, the SAR government is unlikely to intervene in the local property market with similar methods employed by the central government, said Joseph So, an economics professor at Chinese University of Hong Kong. "Hong Kong's economic model is fundamentally different from that on the Chinese mainland," he said. "The laissez-faire policy will remain intact, though the SAR government will likely encourage construction to boost supply and curb prices. However, limiting the number of homes people can buy is too extreme."

John Tsang, Hong Kong's financial secretary, said last week in a real estate conference that Hong Kong will not introduce new measures to curb housing prices.

"The SAR government is aware of the decline in housing prices and transactions in Hong Kong," Tsang said. "Currently, our measures, which aim to keep the home market development stable and healthy, are effective. We will maintain the existing measures."

Currently in Hong Kong, the SAR government had raised borrowing costs, extra transaction taxes and higher down-payment requirements to keep home prices in check. For example, properties priced at more than HK$10 million require a 50 percent down-payment. Last October, real estate was suspended by the SAR government as a class of investment assets under the Capital Entrant Scheme, meaning that mainlanders can no longer buy a home as an asset for immigration application.

But Professor So said that such measures are not signs that the SAR government is turning mainland capital away. "Hong Kong's market-oriented economic model has kept the city's growth strong for decades," he said. "Foreign investment has always been a dominant driver of sustainable growth in Hong Kong, and capital from the Chinese mainland has been more important to the city than ever in the four years since the start of the global recession."