Hong Kong home prices rise for 17th straight month in August

Hong Kong’s secondary home prices rose for the 17th straight month in August, with the data set coinciding with a warning from the Hong Kong Monetary Authority of mounting uncertainties in the outlook for the residential market.

The city’s home price index increased 0.4 per cent to 339.0 in August, according to data on Friday from the Rating and Valuation Department, indicating an acceleration in price appreciation from earlier this year.

One property expert said the price gains would likely face headwinds in the coming months as a cooling cycle took hold.

“Price growth will slow in coming months,” said Donald Choi, managing director at Nan Fung Development.

Hong Kong home prices, already the world’s most expensive, has have surged 25 per cent since March, 2016.

On Thursday, the Hong Kong Monetary Authority flagged concerns about inflated asset prices, noting the outlook was “highly uncertain” amid polarising forces ranging from rising interest rates and increasing supply to aggressive sales tactics by developers.

“The residential property market has become buoyant again since March, with property prices in the secondary market surpassing the peak in September 2015. Transactions in the primary and secondary markets also picked up,” the HKMA said in the “Half-Yearly Monetary and Financial Stability Report”.

“The rising property prices stretched housing affordability further. Partly as a result, it is more Common for recent homebuyers to receive financial support from their parents or to take up high loan to value mortgages provided by property developers.”

The report said the recent property market buoyancy renewed concerns about housing affordability, as the income-gearing ratio reached 75 per cent in the second quarter, much higher than the long-term average of about 50 per cent since 1996.

Meanwhile, Morgan Stanley said it believes Hong Kong home price growth has peaked.

“We expect policy to remain tight and do not expect any relaxation in the near term unless a sharp and significant residential price correction takes place,” the Morgan Stanley report said.

“The market, including home buyers and financial investors, generally believes that further tightening

measures would affect residential price growth – but any further policy adjustment

would curb property stock outperformance.”

New World Development offered 50 units at Parkville in Tuen Mun for sale on Friday morning.

“About 40 per cent of our clients are born in 1980s and 1990s, half of them will rely on financial aid from their parents,” said Sammy Po, chief executive of Midland Realty’s residential market.

The developer will allocate 15 units at 100-unit Parkville project, with units ranging from 422 square feet to 843 sq ft, starting from HK$5.87 million for university graduates.

Adrian Cheng Chi-kong, grandson of the late tycoon Cheng Yu-tung and executive vice-chairman of New World Development (NWD), last week said the company would offer graduates “super-low” down payments of about “several hundred thousand Hong Kong dollars” for flats costing around HK$5 million (US$640,000) in its future projects.

NWD will also absorb the stamp duty and allow a longer mortgage repayment period at an interest rate close to the market rate, Cheng said.

Details of the scheme will be announced within two months.