Cheung Kong executive proved right as homebuyers' sentiment turns
Index shows 3.7 per cent rise in housing costsin wake of Cheung Kong director's comments
Barely six months ago, Justin Chiu Kwok-hung raised eyebrows when he declared that the worst of the property market slump was over.
His remarks generated even more of a stir when he said the naysayers who thought otherwise were "too simple-minded".
The Cheung Kong (Holdings) executive director made his call when the Centa-City leading index hit 118.96 in January.
The index - which is created by Centaline Property Agency and monitors home prices in the secondary market - subsequently drifted to a low of 117.8 in March.
Home prices then moved in a narrow range, constrained by factors such as expectations of a delay in the raising of interest rates in the United States and limited price cuts in the primary market.
Then, in May, the modifications to property cooling measures, including an easing of requirements for double stamp duty, breathed life into the market.
On Friday, the CCL index reached 123.36, just below the previous peak of 123.66 set in March last year. The cumulative gain since the beginning of the year is about 3.7 per cent.
Some analysts said the recent price increase might be short-lived because the market was still clouded by negative factors, such as expectations of a rate increase, upcoming new supply and current cooling measures.
But the recovery has already led to a swing in sentiment in the market, from very negative at the beginning of the year to normal or even positive.
Some investment banks, which had been pessimistic about the market, raised their forecasts last week.
Bank of America Merrill Lynch and JP Morgan said home prices could fall 5 per cent or less this year and drop a further 10 per cent next year, compared with their previous forecasts of a 25 to 30 per cent dive.
It is estimated there were nearly 8,000 units awaiting presale consent in May. That could weigh on prices if developers put all their flats on the market within a short time.
However, buoyed by strong sales in the first half, most developers are in no rush to speed up sales.
Property agents said developers sold 6,821 units in the first six months - about double the number in the same period last year and 72 per cent of last year's total of 9,500, suggesting sales this year will surpass that total.
While supply is not likely to increase rapidly, demand remains strong.
Cheung Kong drew large crowds of potential buyers to the show flats of its Mont Vert project in Tai Po even though there is talk in the market that the developer may have violated the Residential Properties (First-hand Sales) Ordinance by not allowing prospective buyers to see the flats.
Chiu said the company had not broken the law and suggested that people refrain from buying at Mont Vert if they did not feel comfortable with the sales arrangement.
Since prices for the first batch were announced on Friday, more than 4,000 people have put down deposits for flats in the project.
Official sales begin on Saturday.