Property prices increase 10pc in quarter with 14,000 homeowners still burdened Rising property prices in the first quarter have helped more than 5,000 homeowners climb out of the negative equity hole. The number of residential mortgages in negative equity fell to 14,000 by the end of March, down 27.08 per cent from the previous quarter, according to the Hong Kong Monetary Authority's latest statistics. The combined value of mortgages in negative equity was $24 billion, compared with $33 billion on December 31 last year. The figures represented an 87 per cent decline from the peak of about 106,000 cases in June 2003. The combined value of mortgages in negative equity was $165 billion at the time. 'The homeowners' burden will continue to ease as property prices surge,' HKMA chief executive Joseph Yam Chi-kwong told the Legislative Council's financial affairs panel meeting yesterday. He said negative equity was no longer having a significant impact on the stability of the banking system. The quality of negative equity residential mortgage loans also improved, with the three-month delinquency ratio falling to 1.51 per cent from 1.58 per cent at the end of December last year. Home prices were estimated to have risen more than 10 per cent in the first three months of this year. Centaline Property Agency said on average home prices stood at 55.21 per cent of 1997's peak level. Midland Realty chief analyst Buggle Lau Ka-fai said that as property prices went up, it was not surprising to see the number of homeowners in negative equity decline. 'Most of the residential mortgages will come out of negative equity when home prices go up a further 15 to 20 per cent. I expect this will happen this year,' Mr Lau said. He said the impact of a declining number of homeowners in negative equity had been reflected on the housing sector since last year. 'As the numbers started falling from their peak in June 2003, the number of transactions in the secondary market picked up,' Mr Lau said. Helped by the secondary market activity, the Land Registry recorded 16,280 property transactions last month - the highest since July 1997 and up 59 per cent from March. Deals in the secondary market totalled 13,325, up 71.9 per cent from March. Centaline research manager Wong Leung-shing said negative equity was no longer an important issue in the housing sector. 'The current number of 14,000 homeowners in negative equity is relatively small when compared with one million flat owners in Hong Kong,' Mr Wong said. Meanwhile, the Lands Department said there were 16 applications for pre-sale consent pending approval last month, They involved 6,006 residential units. The department issued consent for the sale of 1,054 residential units last month.