Luxury home prices and rents will rise by 8 per cent to 10 per cent in the second half of this year, according to property consultancy Vigers Hong Kong. Managing director Albert Chan Kar-chai said luxury home prices had risen 3 per cent in the first six months amid strong take-up and increased market activity. 'Buying sentiment in the luxury sector has improved although prices in the second quarter tended to be flat,' Mr Chan said. Presenting a half-yearly review of the property market, Vigers said average rentals in the luxury market had risen by 5 per cent to 8 per cent in the first six months. Average rentals on The Peak rose 3 per cent to HK$42 per square foot a month while in Island South they increased 7.4 per cent to HK$33.5 per square foot. Mr Chan said an expected influx of expatriates and IT professionals following the mainland's entry to the World Trade Organisation would lead to significant changes in the luxury residential market. Vigers expected luxury prices and rentals to rise by 10 per cent to 15 per cent for the whole of this year. Mr Chan said the expansion of the Hong Kong Mortgage Corp's (HKMC) mortgage insurance scheme would help to lift sentiment in the property market. The HKMC said last week it would provide insurance on loans up to 20 per cent of a property's value, enabling buyers to obtain 90 per cent in mortgage financing. However, Mr Chan said prices in the mass residential market would remain flat in the second half. Director of corporate property services Neil Campion said the improving economy had boosted investment activity in the office market. 'Overseas investors are confident in the office market with a significant increase in purchases of entire buildings and sites,' said Mr Campion. Foreign investors such as the Government of Singapore Investment Corp fund had bought the lower block of Grand Millennium Plaza in Sheung Wan at an average price of HK$3,730 per square foot. Mr Campion said the strong performance of the United States and Hong Kong stock markets had boosted sentiment in the property sales market, with office prices soaring 5 per cent to 9 per cent in the first half. 'There has been strong demand from dotcom companies for grade-A offices,' Mr Campion said.