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Home prices and rents scaled new heights in Hong Kong in October. Photo: Bloomberg

Hong Kong home prices hit fresh high

Home-seekers suspecting it is tougher than ever to buy received fresh proof yesterday with a report indicating prices reached a record high for a seventh straight month.

The Rating and Valuation Department’s monthly price index for private homes pushed deeper into record territory in October, although the pace of growth slowed. A gauge of prices in the secondary market also showed prices at record levels.

The department’s index climbed to 270.1, 1.5 per cent higher than September’s 266.1. The growth rate was down from the monthly rise of 1.8 per cent in September.

Centaline Property Agency announced its Centa-City Leading index, which tracks secondary home prices at 100 housing estates, also hit a record high as of yesterday. The index rose 0.23 per cent week on week to 130.46.

The property agency’s research head Wong Leung-sing expects the gauge may soon hit 136. But analysts said home prices would stabilise next year or even decline in view of increased project launches by developers.

According to the Rating and Valuation Department, the latest round of price rises has been driven by interest in small flats, with the price of units of 430 sq ft or below rising 1.7 per cent in October. Units bigger than 1,070 sq ft increased just 0.08 per cent.

The biggest growth was seen in Kowloon.

According to the department, a unit of less than 430 sq ft on average cost HK$4.77 million – HK$220,000 more than a month ago.

Analysts said expectations of price falls did not materialise this year because of low interest rates and strong buying demand.

“As developers continue to speed up new launches, the growth pace is not sustainable,” said Sammy Po Siu-ming, the chief executive of Midland Realty’s residential department.

Po expects 34,000 first-hand units will be available for sale next year, with smaller units accounting for a major portion.

“Taking into account the recent new launches, developers priced their new products in line with the secondary market. Home prices will go up or down within 5 per cent,” he said.

Credit Suisse forecast in a report home prices would correct by 15 per cent next year. Po said developers were still active in buying quality sites while rushing to offload projects.

According to the Lands Department, a government tender for a residential site in Wu Kai Sha, Ma On Shan, attracted 21 bids from developers including Cheung Kong (Holdings), Sun Hung Kai Properties, Emperor International Holdings and K Wah International Holdings. The site, covering 252,954 sq ft, can provide a gross area of 387,501 sq ft.

It is estimated the site will be sold at between HK$1.55 billion and HK$1.75 billion.

This article appeared in the South China Morning Post print edition as: Housing prices extend rally to record highs
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