Hong Kong’s real estate bull market regains its pace, as sales value of city’s subsidised homes soars to 22-year high

Hong Kong’s property bull market regained pace after a brief falter, extending its reach over to the city’s subsidised housing market as the number of transactions and sales value soared.

The number of pre-owned flats sold through the Home Ownership Scheme (HOS) increased 60 per cent to 477 units in March, compared with the previous month, according to data from Centaline Property Agency. Their sales value jumped 64.6 per cent to HK$2.41 billion (US$307.12 million).

The monthly transactions were the highest by collective value since April 1997 and the most by volume since March 2017, according to the property agency.

The March data contrasts with the market slump five months ago, when just 188 pre-owned HOS flats were sold in October, the lowest since records began in 1996.

“The recent strong performance showed that previous pervasive pessimism was wrong. The market is correcting itself from the previous excessive slump,” said Wong Leung-sing, senior associate director of research at Centaline.

He said the mood among homebuyers has improved since the autumn, when concerns about the US-China trade war, an economic recession and downtrending stocks weighed on sentiment.

“But the US and China are expected to reach a deal, the US Fed has decided not to raise rates and the stock market is rising,” he said.

Rising property prices underscore the policy challenge facing Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor, who had made affordable housing one of the priorities of her administration. The prices of Hong Kong’s unsubsidised private homes resumed their gains in February, after a five-month stumble that saw prices fall 9.2 per cent.

During the first two months of the year, prices were up 1.6 per cent, according to data from the city’s Rating and Valuation Department, putting Hong Kong back on track as the world’s most expensive urban centre to live in.

Centaline data showed 1,131 pre-owned homes were sold in the first three month of the year, a rise of 67.1 per cent over the previous quarter. A total of 5,250 new homes were sold in the first quarter, a rise of 54 per cent on the prior quarter, according to Ricacorp data. Official price data for March has not yet been released.

An earlier straw poll conducted by the Post showed that more than half of market observers, including developers, analysts and economists, believe that the correction in home prices is over. Investment banks Nomura and CLSA expect home prices to rise by 15 per cent his year.

“The sentiment is turning positive. At least the upbeat momentum can continue in the second quarter,” said Derek Chan, head of research at Ricacorp Properties.

A HOS flat in Charming Garden, Tai Kok Tsui of West Kowloon sold for HK$9.2 million, becoming the most expensive pre-owned subsidised flat sold in the first quarter, according to Centaline.