Hong Kong's property boom is now affecting government-subsidised homes, with the price of a flat at one subsidised-housing estate almost reaching the 1997 peak.
The 521 square foot flat in Kornhill Gardens, Quarry Bay, was sold for HK$4.18 million, or HK$8,023 per square foot, according to Centaline Property Agency.
'That is very close to the record high of HK$8,092 per square foot for a 587 sqft unit achieved in 1997's peak,' said Wong Leung-sing, head of Centaline's research department.
Kornhill Gardens is a government-subsidised project under the Private Sector Participation Scheme. Subsidised housing is built by developers for the Housing Authority, with flats sold at a discount under the Home Ownership Scheme.
Wong said the five deals for subsidised homes with the highest prices paid per square foot in the first 27 days of May were all in Kornhill. As well as the flat sold for HK$8,023 per square foot, three others were sold for more than HK$7,000 per square foot.
In terms of sale price, the costliest subsidised home sold in the same period was at Hong Keung Court in Wong Tai Sin, where a flat went for HK$5 million.
Property agents said the capital growth in subsidised housing reflected the boom in the private housing market. Sun Hung Kai Properties last Tuesday sold 117 units at its i.UniQ Residence in Shau Kei Wan. The sale generated revenue of about HK$800 million at an average selling price of HK$13,500 per sqft.
'The supply in urban districts is limited and prices will continue to rise,' said Wong.
According to the latest Centa-City Index, the average property price rose 0.74 per cent week on week over May 16-22, to its highest level since October 1997. It is partly bolstered by a positive result from a land sale at Stubbs Road and higher than expected average selling prices at i.UniQ Residence, according to Lee Wee Liat, head of regional research at Samsung Securities (Asia).
Wong expects all home prices will eventually surpass their peak levels in 1997 and continue to rise. His confidence is backed by high inflation. He noted that some banks have raised mortgage rates, but said the increase would not be significant if the US does not raise interest rates.