Hong Kong home prices end 11-month rising streak

HK property market still hot even as home values stop climb to record highs in March

PUBLISHED : Saturday, 09 May, 2015, 2:27am
UPDATED : Saturday, 09 May, 2015, 2:27am

Home prices have ended an 11-month rise to record highs, the Rating and Valuation Department said, but the market remains on the boil as two government sites have received 32 bids.

Analysts said prices and sales could slow but only in the short term, and they were expected to bounce back if interest rates did not rise this year.

The department said the March price index for private homes was unchanged from February at 291.4 points, after rising 11 consecutive months to record highs.

The price index of flats of less than 430 sq ft, which rose 15.2 per cent last year, slipped to 318.6 from 318.7. Mass housing units were unchanged but large homes, those above 1,076 sq ft, rose 0.26 per cent.

"The data reflects the impact of the tightened measures announced by the Hong Kong Monetary Authority in February," Credit Suisse analyst Joyce Kwock said.

The HKMA tightened mortgage lending rules, including lowering the loan-value ratio for owner-occupied properties valued below HK$7 million to 60 per cent from 70 per cent.

"Market sentiment remains robust. Home prices are unlikely to drop this year if interest rates don't rise," Kwock said.

Meanwhile, a Centaline Property Agency index on second-hand homes showed prices rose 0.17 per cent in the week to yesterday.

Buggle Lau Ka-fai, the chief analyst at Midland Realty, said prices and sales of second-hand homes would be stable in view of a possible interest-rate increase. Mass housing prices have risen about 5 per cent this year.

Interest rates had been expected to rise next month but the market now believes the US Federal Reserve would wait until December before raising rates for the first time since 2006.

As the Hong Kong dollar is pegged to the US dollar, any rate rise in the US would have to be followed by a similar tightening in the city.

"Some buyers are now waiting and watching. But they will come back to the market if the rates do not go up in the next few months," Lau said.

However, developers remain bullish on the sector. Yesterday, 19 tenders were filed for a 62,700 sq ft residential site in Lok Wo Sha Lane, Ma On Shan, while there were 13 bids for a 40,800 sq ft commercial lot in Kowloon Bay.

Among the bidders were Sun Hung Kai Properties, Henderson Land Development, Wheelock Properties, New World Development, CK Hutchison Holdings and Sino Land.