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Kenneth Ko

THE speculative boom in luxury homes may continue further, according to a quarterly report conducted by Centaline Property Agency.

  And prices of small and medium-sized flats are increasing, probably because of pent-up demand from home buyers.

  The agency says prices of luxury flats increased by about 30 per cent in the first half of this year, and the potential rise in capital value is poised to encourage speculative activity.

  Agency executive director Shih Wing-ching said demand was always strong in the luxury residential sector, where there was a limited supply of 2,000 to 3,000 units a year.

  The Sino-British talks, which began this year, had improved sentiment in the property market, and luxury homes had turned out to be one of the biggest beneficiaries.

  ''It is natural to see speculators coming in when the prices are moving upwards,'' he said.

  ''Speculation has not been uncommon in the luxury home market recently. Some speculators scrambled to buy luxury homes, and then resold those units within weeks for quick profits.''   Mr Shih said the moves by Hongkong Bank and Standard Chartered Bank to lower the mortgage limit to 60 per cent of a luxury flat's value seemed to have cooled speculation.

  The number of transactions in the luxury sector had fallen in the latter half of this month, compared with the activity in June, he said.

  ''But prices of luxury homes remain firm, as flat-owners are unwilling to sell at lower prices,'' he said.

  According to the agency's quarterly report, prices of small to medium-sized homes have increased by more than 15 per cent in the first six months of this year.

  Home prices in Taikoo Shing and Kornhill have reached $5,000 per square foot, while those in Kingswood Villas in Yuen Long have risen to $2,400 per sq ft.

  Mr Shih said the price rise could be attributed to pent-up demand from home-seekers, many of whom had accumulated enough money in the past year to afford the 30 per cent downpayment on flats.

  ''The dampening effect of the 70 per cent mortgage limit is decreasing,'' he said.

  ''The Government is unlikely to relax the mortgage ceiling now, which will only fuel the price rise.''   Mr Shih predicted that prices of luxury homes could rise a further 15 per cent and those of small to medium-sized flats would increase by another 10 per cent this year.

  However, the prospects for the residential market would be affected by the outcome of the Sino-British talks, he said.

  ''China's efforts in cooling its economy may have a certain impact on Hongkong's economic growth and property market as well,'' he said.

  In the office property sector, Chinese-backed companies had been the most active investors in the past few months.

  Prices of top grade offices in Central exceeded $11,000 per sq ft, while those in Tsim Sha Tsui and Wan Chai breached $8,100 per sq ft, according to the agency's report.

  Mr Shih said the austerity programme implemented by Beijing would have an impact, but a limited one, on the appetite of Chinese-backed investors for the territory's office properties.

  ''Some of our Chinese-funded clients have been asked to repatriate funds, but the amount is said to be relatively small,'' he said.

  ''Those clients have not backed away from their offers or stopped on-going discussions.''   The agency's report said office rents had seen a steady rise in the first half of the year, averaging an increase of three to four per cent for each quarter, and they were expected to rise further.



No end seen to soaring home prices