UPDATE 1-HK’s March home prices rise at fastest pace in 2-1/2 years

02-May-2019 Intellasia | Reuters | 6:00 AM Print This Post

Prices for private homes in Hong Kong, one of the world’s most expensive property markets, rose in March at their fastest pace since September 2016 on strong pent-up demand and improved sentiment.

Home prices in the densely-populated city gained 2.9 percent in March, the third straight rise and accelerating from February’s revised 1.6 percent increase, government data showed on Tuesday.

Prices fell from August to December, weighed down by US-China trade tensions and higher interest rates after rising 28 consecutive months.

The March rise is “higher than expected,” said Thomas Lam, executive director of Knight Frank. “If the index continues to rise in the next two, three months and there are no other negative factors, housing prices will see another uptrend in the short term.”

Also on Tuesday, the Hong Kong Monetary Authority said its survey estimated 44 negative equity cases on residential mortgage loans in the January-March quarter, a drop from 262 in 2018′s last three months, when the city had its first cases in two years.

As prices rebound, the aggregate value of residential mortgage loans in negative equity decreased to HK$230 million ($29.32 million) in the first quarter from HK$1.19 billion in the previous quarter, HKMA said.

Over the past decade, ultra-low interest rates, limited housing supply and large capital flows from mainland Chinese buyers into the financial city on China’s doorstep pushed home prices up more than 200 percent, angering many Hong Kong residents who could not afford to jump on the bandwagon.

On April 12, property consultancy CBRE named Hong Kong the least affordable housing market for the eighth year, with an average property costing $1.2 million or $2,091 per square foot. That compares with Singapore, ranked the second priciest, at $874,372 and $1,063, respectively.

Consultancy JLL said on Monday a drop in stamp duties levied on non-first time and foreign homebuyers in the first quarter suggested the bulk of buyers were local first-time purchasers.

As the property market starts to revive, developers are selling launches at higher prices than a few months ago.

Last week, New World Development and Henderson Land launched a joint high-rise residential development in Kowloon at a floor price 10 percent higher than the neighbourhood.

In the first quarter, developers sold 5,532 new flats, the most in 10 quarters. That was 70 percent above the previous quarter and 44 percent more than a year earlier.

Property developers also became more active in land auctions. A land plot in the New Territories received 11 tenders last week, according to Hong Kong media, a high in recent months despite the record-asking price of the area.

According to Hong Kong media, there were 11 offers last week for a land plot in the New Territoriesa high in recent monthseven though the asking price was a record high for the area. ($1 = 7.8446 Hong Kong dollars)



Category: Hong Kong

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