Hong Kong’s February home prices rise for a second month, showing end of market correction
- Prices have risen 1.6 per cent in the first two months of 2019
- Homebuyers want to enter the market before prices rise further, says Derek Chan of Ricacorp Properties
Hong Kong home prices rose for a second consecutive month in February, providing further evidence that the property correction is over.
The overall price index of pre-owned homes increased at a much faster pace of 1.3 per cent to 365.2 in February, according to data from the city’s Rating and Valuation Department.
In January, home prices edged up 0.25 per cent.
For the first two months of 2019, Hong Kong home prices have risen 1.6 per cent after having dropped by 9.2 per cent from August to December.
“Sales of small to medium sized flats are gaining momentum as home seekers want to enter the market before prices rise further. It pushed up prices in most housing estates and contributed to the faster growth,” said Derek Chan, head of research at Ricacorp Properties.
Thirteen out of the 23 respondents, including developers, analysts and economists, said they expected prices of new homes to rise by up to 15 per cent on the back of pent-up demand.
The rest, however, expected prices to fall further, by as much as 5 per cent, because of the uncertain global economic outlook.
Chan expects home prices to rise another 2 per cent in March, and then accelerate in the second quarter.
As of March 27, more than 4,700 new and pre-owned homes had been sold, up 9.5 per cent from 4,293 deals in the whole of February, according to data compiled by Midland Realty.
Ricacorp said average prices rose 1.8 per cent at 50 housing estates it tracked in February, with Central Park Towers in Tin Shui Wai seeing the steepest increase.
Transaction prices there grew 6.5 per cent to HK$11,714 per square foot, it said.
“The strong uptake of second-hand flats has spilled over into the primary market,” said Chan, referring to a surge in confidence that has emerged from the US Federal Reserve’s decision to delay interest rate rises and a rally in the stock market.
Buyers had snapped up 1,233 new flats as of March 27, compared with 1,660 in February.
Long queues have returned to sales offices. New World Development’s Artisan Garden project in To Kwa Wan drew 3,700 bids for 294 units.
On March 23, more than 80 per cent of 607 units that went on sale in four different projects had been sold in the biggest weekend launch of the year.
One buyer, who would only be identified by his surname, Chan, put down a 20 per cent deposit for a HK$5 million, one-bedroom flat at Artisan Garden. “We are optimistic about the housing market,” he said. “Home prices will continue trending upwards.”
Meanwhile, the vacancy rate in 2018 rose 0.6 percentage points to 4.3 per cent of total stock, or 51,430 units, up from 3.7 per cent a year earlier, according to the preliminary findings of the Hong Kong Property Review 2019, put together by the Rating and Valuation Department. Vacancy indicates the number of units not physically occupied at the time of conducting the survey at the end of the year, it said.
Stewart Leung, chairman of Wheelock Properties, however, said there were only 3,000 empty units held by developers.
“The vacancy rate should be one of the lowest in the world,” he said,
