Average home prices in Hong Kong hit another record

The government yesterday revealed Hong Kong's average home prices hit a record high in June, a day after Sun Hung Kai Properties began marketing the world's most expensive house per square foot in the city's exclusive Peak district.

The Rating and Valuation Department's monthly price index of private housing climbed 2.6 percentage points from the previous record, set in May, to 249.8.

The index is 4.1 per cent higher than its level of 240 in February last year, before government market-cooling measures announced on February 22 could affect property prices.

Chau Kwong-wing, a professor in the real estate and construction department at the University of Hong Kong, said he was not worried about the property market bubble bursting.

He said the high tax on buying second or subsequent homes had only increased buyers' transaction costs, and would not affect the fundamental problems of the property market.

"Home prices will be supported by low interest rates and the housing shortage. Besides strong demand from end-users, we have seen investors at home and from the mainland becoming active in recent months, and the government could further increase the 15 per cent buyer's stamp duty to remove the heat from the boiling property market," Chau said.

The buyer's stamp duty is applied to flats bought by nonpermanent Hong Kong residents.

"It is a mature market. Home seekers would be cautious about the rising property prices. Investors would also worry that the government would put in place new policies to cool the market," he added.

Since property prices did not drop after the cooling measures were implemented in 2012, Wong Leung-sing, an associate director of research at Centaline Property Agency, said home seekers had returned to the market in the second quarter.

The index shows flats with a saleable area of between 1,000 sq ft and 1,700 sq ft posted the highest average price rise in June - 1.2 per cent from the month before. Hong Kong ranked as the world's third most expensive place after Monaco and London to own a 1,291 sq ft city centre luxury flat, according to the latest data released by US online property research website Global Property Guide. New York ranked as the sixth most expensive city for such flats.

The price index for mass residential properties with a saleable area between 431 sq ft and 752 sq ft climbed 1.16 per cent.

"The amendment of the terms of the double stamp duty in May [changing the eligibility rules so that it applied to fewer purchases] has also encouraged upgraders to buy flats," Centaline's Wong said.

Meanwhile, Sun Hung Kai Properties is offering the super-deluxe house on The Peak for a record HK$175,735 per sq ft.

SHKP released the price list of the 12 houses at Twelve Peaks at 12 Mount Kellett Road on Wednesday night, with the priciest, No1, going for HK$819.1 million.

"The decoration cost of No1 is nearly equivalent to10 per cent of the selling price. It will probably be the most expensive house in the world per square foot if it fetches that amount," said Victor Lui Ting, deputy managing director at SHKP.