Home prices in a number of estates are still below their 1997 peak level. This is despite the sharp rise in over the past four years that has taken average prices in major housing estates above the highs last seen before the onset of the Asian financial crisis in October, 1997.
The benchmark Centa-City Leading Mass Index, which tracks the average house price in Hong Kong's 85 large housing estates on the secondary market, stood at 107.88 points on September 28, its highest-ever level and 7.9 per cent higher than the previous peak in 1997.
However, in some housing estates that were launched for sale in the booming market before the collapse of prices, prices are still below those peak levels.
Two of the estates concerned are phase three of Discovery Park in Tsuen Wan, and the first phase of Villa Esplanada in Tsing Yi.
According to the database of EPRC, a website that provides information on property transactions, flats in phase three of Discovery Park were first sold for prices ranging between HK$5,555 and HK$9,579 per square foot; the average price reached HK$7,371 per square foot.
More than 1,000 flats were sold on the first day of the launch.
But latest data show the average selling price in the estate is now HK$6,015 per square foot - 18 per cent below its 1997 peak. The highest resale price recorded on the estate is HK$6,803 per square foot, 29 per cent below the top price in 1997.
Villa Esplanada was another popular housing estate in 1997. Excluding pre-ordered flats, the first phase release at the estate saw 713 flats put up for sale on June 8, 1997. There were a staggering 30,400 applications to buy the flats, which were sold out on the first day of the launch, with the highest price recorded HK$9,720 per square foot, and the average price working out at about HK$6,920 per square foot.
Calvin Leung, senior sales manager at agency Midland Realty, said the prices of small flats, of between 600 and 800 square feet, on the housing estate had returned to their 1997 levels and prices had rebounded by some 15 to 18 per cent from their lows after the financial crisis.
"However, the prices of the bigger flats of around 1,000 square feet in size, are still below their highs. Those flats sold for HK$8.5 million to HK$9 million in 1997, but the highest price this year was HK$8 million," he said.
Sammy Po Siu-ming of Midland said prices at Discovery Park had not rallied above their previous highs because the estate was not close to an MTR station. "Prices at Luk Yeung Sun Chuen are back at their previous highs because it is located on the top of the Tsuen Wan station," he said.
Economist Kwan Cheuk-chiu said the price trend provided a lesson for homeowners. "Even though property prices have risen sharply, the prices of those estates are still below their peak levels because we were experiencing a property bubble," he said.
Recently, the asking prices for some projects, such as Sun Hung Kai Properties' Century Gateway in Tuen Mun, were pitched well above prices paid in the secondary market in the same area.
The average asking price of the first batch of flats released in early September at Century Gateway was HK$11,238 per square foot - more than double prices in nearby estates on the secondary market.
"It is reasonable if the price of a new project is 10 to 15 per cent higher than the nearby estates in secondary market. But it isn't value for money if there is a 40 to 50 per cent price difference," said Kwan.
He suggested home seekers should choose housing estates in good locations and close to MTR stations, such as Taikoo Shing and Heng Fa Chuen in Island East, which would have a higher resistance to price declines.
"People in Hong Kong Island have higher consumption power and affordability, which could support the property prices. The upside potential in the districts with lower median monthly personal income would be limited," he said.
Estates in the districts with new infrastructure such as the railway lines planned or under construction in Sheung Wan and To Kwa Wan would also perform better, he said.