Island East offers top return
Housing estates in Island East and the New Territories outperformed all other districts in Hong Kong to record the strongest growth in capital values this year.
Data collated by Ricacorp Properties shows that with the year's end near, home values in Taikoo Shing in Quarry Bay, Lei King Wan in Sai Wan Ho and Discovery Park in Tsuen Wan have recorded the best growth in capital value for 2011.
The average home price in Lei King Wan in the first two weeks of this month was HK$8,872 per square foot, up 17.7 per cent from December last year. Prices on the estate peaked in June at HK$9,310 per square foot on average before easing towards the year's end. In Taikoo Shing, the average home price peaked in May at HK$10,550 per square foot, but early this month was still up 17 per cent on the same month last year at HK$9,922 per square foot.
In Sha Tin, another stand-out performer was Golden Lion Garden, where home prices are ending the year up 16.7 per cent on December last year, at HK$4,229 per square foot.
Patrick Chow Moon-kit, head of research at Ricacorp Properties, said the strong growth in house prices at Lei King Wan was due to demand for homes in nearby Grand Promenade, where prices continued to hit record highs throughout the year.
'The strong growth in prices at Taikoo Shing was due to the leasing market in the area. The average rent paid in the estate was up 9.3 per cent to a new market peak of HK$30.60 per square foot in September, while rents in other estates grew by some 5 to 7 per cent only,' said Chow.
Higher rental returns in the estate attracted investors to buy flats in Taikoo Shing, which supported substantial growth in capital values in the area, he said. At Discovery Park and Golden Lion Garden, prices rose strongly as a result of having lagged price gains in other estates last year, which attracted end-users and investors to buy flats, according to Chow.
Chow said prices across all 50 major housing estates grew by 18.9 per cent on average last year, but in the first 11 months of this year, the 50 estates had seen price gains of only 7.7 per cent. He expects price growth of 6.7 per cent for the whole year.
The best price performance next year was likely to come from small flats in the New Territories, such as those in the Sha Tin Centre, Kingswood Villas in Tin Shui Wai, and Coastal Skyline in Tung Chung, said Chow.
'The performance of flats priced above HK$6 million will be poorer due to current tight loan policies. In the New Territories the price performance of smaller flats will be better as they will be supported by an active leasing market,' he said.
Sammy Po Siu-ming, a director at Midland Realty, agreed that estates in the New Territories were likely to record better sales next year.
'Since the housing price correction started in the middle of this year, prices at City One Sha Tin and Kingswood Villas in the New Territories have fallen more than 10 per cent - more than in the other estates,' said Po.
He expects average prices across all estates in the mass market to drop a further 2 to 5 per cent by the Lunar New Year in January but rebound by 5 to 8 per cent in the second quarter.
Patrick Tsang, a senior sales director at Centaline Property Agency in Island East, said only a few deals had been closed in Taikoo Shing and Lei King Wan recently. 'But I think many buyers will be attracted to buy flats in Taikoo Shing once the prices drop by 5 to 8 per cent in the short run,' he said.
Alva To Yu-hung, of property consultancy DTZ, believes the price of mass housing in Hong Kong will drop by about 15 per cent next year due to the cooling measures and economic uncertainty in the US and Europe.
The predicted fall in prices for estates next year, according to Patrick Chow of Ricacorp Properties. He sees stable NT prices