Small, medium-sized flat prices up for the sixth month, but rise seen slowing

Demand strong for housing in New Territories but appreciation is slowing

PUBLISHED : Friday, 07 November, 2014, 11:51am
UPDATED : Saturday, 08 November, 2014, 4:17am

Strong demand for small and medium-sized flats pushed Hong Kong home prices to a fresh high for the sixth consecutive month in September, but analysts believe the speed of appreciation is slowing.

The Rating and Valuation Department's monthly price index for private homes climbed to a record 265.8 in September, 1.8 per cent higher than in August. It has risen 8.45 per cent in the first nine months.

Prices of flats of up to 1,075 square feet of saleable area rose 1.84 per cent to 266.1 in September from the previous month. Prices of bigger units rose 1.18 per cent to 257.2.

The new round of property price rises has been driven by interest in small flats, especially in the New Territories.

A 430 sq ft flat in the New Territories on average cost HK$3.78 million in September compared with HK$3.35 million in January. A 750 sq ft flat in the New Territories fetched on average HK$5.8 million, some 13.5 per cent higher than in January.

But the average going rate of large flats, between 753 sq ft and 1,075 sq ft, on Hong Kong Island is currently HK$14,286 per square foot, compared with HK$14,478 per square foot in January.

Though prices overall have been rising, the pace of growth has been slowing. Centaline City Leading Index, which tracks prices of second-hand homes, was up 0.01 per cent week on week - after coming off a dip - to 129.39 as of October 26, two weeks after hitting a record high.

Midland Realty chief analyst Buggle Lau Ka-fai, however, said average home price in terms of saleable area was HK$9,643 per square foot in October, according to his company's home price index, still a record.

"But the growth has been slowing," he said. Midland's index in October showed home prices were up 0.8 per cent from the previous month, the lowest in five months, said Lau.

The Rating and Valuation Department's report also shows 2,527 new units were completed in September, 5.55 times higher than in August.

Lau said 12,184 units were completed in the first nine months, up 176 per cent from the same period in 2013, and the highest number in nine years.

"The number accounts for 69.2 per cent of the government's full-year completion target of 17,614 units," he said.

The major supply is coming from the New Territories, with 8,804 units, 1,945 in Kowloon and 1,435 on Hong Kong Island.