Hong Kong housing

Hong Kong’s February home price index rises to a record

February home prices rose 1.1 per cent, reflecting the 11th consecutive month of gains

PUBLISHED : Friday, 31 March, 2017, 10:43am
UPDATED : Friday, 31 March, 2017, 11:30pm

Home prices in Hong Kong, the world’s least affordable major city, rose for the 11th consecutive month to an all-time high in February, underscoring the importance of housing issues for the city’s new leader.

February’s home price index, which represents home price movements in the secondary market, rose 1.1 per cent to 312.8, from January’s 309.4, according to data from the Ratings & Valuation Department.

Prices rose 14.3 per cent in February compared with last year, and advanced 1.8 per cent since the beginning of 2017, the data showed.

Housing affordability ranks as the most crucial issue facing Hong Kong’s next leader, according to a South China Morning Post survey in early February.

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In a telephone survey, which interviewed 1,018 people between February 2 and 8, more than 70 per cent of respondents, or 717 people, selected housing prices as the most burning issue.

It marked an increase on the results of a January survey, in which 63 per cent – or 651 out of 1,024 respondents – selected the issue as the main priority.

The Post commissioned Chinese University’s centre for communication and public opinion to conduct the surveys, which asked the same batch of ­questions.

In response to home prices hitting a new high, chief executive-elect Carrie Lam Cheng Yuet-ngor said the past two administrations under Tung Chee-hwa and Leung Chun-ying had introduced measures to control demand and reaped some achievements but failed to reverse uptrending property prices. Upon taking office, Lam said she would work to increase home supply, reaffirming that housing and land issues are her administration’s most important policy agenda items.

In her manifesto, Lam promised to provide affordable housing for first-time homebuyers in the “sandwich class” – those earning too much to qualify for public housing but not enough to buy in the private sector.

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In November, Hong Kong raised the stamp duty on home purchases to 15 per cent across the board, exempting local residents who are first-time buyers.

Home prices rose at a rapid pace after the Brexit result in June last year, which prompted Hong Kong and mainland investors to take a second look at the city’s housing sector.

According to Rating & Valuation Department, the biggest growth was seen in small flats smaller than 430 square feet, with a growth rate of 1.2 per cent in February from the previous month and 14.77 per cent compared with a year ago.

Buying momentum and prices have continued to rise despite the property stamp duty, an upward interest rate cycle, and the government’s determination to increase home supply in coming years.

Record-breaking deals were reported by property agents in a number of housing estates. For example, a 676 sq ft three-bedroom unit at Royal Ascot in Fo Tan was recently sold for HK$9.62 million (US$1.24 million), the highest price paid for a unit of such size in the housing estate, according to Centaline Property Agency.

Analysts said strong primary sales and a shift by developers to offer new projects at record highs will continue to push up prices.

A new residential project in Sai Ying Pun, 28 Aberdeen St, offered the first 10 one-bedroom flats in layouts of 407 sq ft for between HK$11.9 million and HK$15 million after a 10 per cent discount on Friday.

But the most expensive flat on the 20th floor costing HK$16.55 million, or HK$40,676 per sq ft after discount, is yet to be released for sale.