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Developers are recording an increase in transactions but analysts believe a genuine rebound is still a long way off

Improved market sentiment gave a boost  to property transactions last month, prompting  developers to raises prices at  some of their projects. But analysts are reluctant to say  a rebound is under way. They would  like to see several more months of stable prices and sustained sales volume before making an optimistic declaration.

Centaline Property Agency said that sales in August - 7,947 transactions - were  a 3.8 per cent improvement on July sales,  marking the third consecutive monthly increase. Sales in the secondary residential market climbed to 4,386 deals, the highest level in 13 months.

Centaline senior research and marketing manager Wong Leung-sing said the higher volume of sales indicated an initial recovery for the property market from the negative effects of Sars.  He believed prices in the secondary residential market  had largely stabilised.

The improved market has encouraged some developers to raise prices.

On Monday, Cheung Kong (Holdings), one of Hong Kong's largest developers, raised prices by 3 per cent to 5 per cent for some units at Caribbean Coast in Tung Chung and Hampton Place in Tai Kok Tsui.

Cheung Kong  plans a similar increase for units at One Beacon Hill in Kowloon Tong.

Sino Land may raise prices by 3 per cent for three-bedroom units at Oceania Heights in Tuen Mun. Henderson Land Development and privately-run Chinachem Group are also adjusting prices and cutting back discounts for  remaining units.

In the secondary market, the average selling prices of second-hand flats at 10  housing estates rose steadily last month,  said Centaline Property Agency.

Last month, prices at Kornhill Plaza in Quarry Bay rose 5.5 per cent month on month, while flats at Taikoo Shing fell 5.3 per cent in the same period.

In Kowloon, prices in Laguna City,  Lam Tin, rose 4.4 per cent, while Telford Gardens in Kowloon Bay fell 1 per cent.

In the New Territories, flats in Metro City, Tseung Kwan O, fell 2.2 per cent, and Kingswood Villas in Tin Shui Wai rose 5.78 per cent.

Mr Wong said growing  confidence in the economy, accompanied by an  influx of mainland visitors, had given Hong Kong buyers heart and boosted  sales activity.  But most buyers were  cautious, preferring to take  a wait-and-see attitude until a  package of measures to support the property market was unveiled next month.

'It  is too early to say the market has recovered. At least, not until overall residential prices stop declining and the sales volume is sustained for at least half a year,'  Mr Wong said. 'Prices cannot shoot up unless vigorous stimulus measures are taken, such as suspending government land sales for the next three years.'

In November last year the government put public land sales on hold for a year. The policy is  to be reviewed this November.

Mr Wong estimated that supply in the primary residential market could exceed 80,000 units over the next three years. With the possible addition of residential developments by the MTRC and KCRC, the figure could climb by another 80,000 units, he said.

Derek Cheung, head of Hong Kong property research at HSBC Securities Asia, said excess supply over the next 12 months would keep residential prices from rising.

'I would not be too optimistic,' he said. 'The government is not likely to introduce serious measures  because many believe the market has rebounded. Everyone thinks sentiment has improved.'

Mr Cheung believed housing prices could rise significantly in three to five years  if the United States economy stayed on track and Hong Kong developers refrained from increasing supply substantially.

Wharf (Holdings) assistant director Ricky Wong Kwong-yiu said a buoyant stock market and a rush of mainland tourists  had boosted the retail sector and improved market sentiment.

Wharf sold 120 residential units at  its projects at Sorrento, at Kowloon Station, and Bellagio in Sham Tseng, generating HK$400 million in sales, Mr Wong said.

The company would study market conditions before it decided to release additional units for sale, he said, adding that prices would not be adjusted unless the government revealed concrete measures to revitalise the property sector.

Chesterton Petty executive director Charles Chan Chiu-kwok described price hikes at certain residential projects as ploys to accelerate sales, and said that they were not a sign of recovering demand.



Sales ride high on market sentiment