Hong Kong’s pre-owned home prices up for two years straight
Prices for pre-owned homes in Hong Kong continued higher in March, even as new supply and rising mortgage rates put a damper on the rate of growth, according to government data.
An index of lived-in home prices rose 3.7 points, or 1.01 per cent, to 368.4 in March, according to data released by the Rating and Valuation Department. The rate of increase was slower than the 1.8 per cent gain in February.
The rental index surged by 1.1 per cent to 188.9, reflecting an increase in leasing costs, the data showed.
“There are not many available homes in the market. We see the prices of lived-in homes hitting a record-high in the past couple of months because owners would like to hold their homes unless the offer meets their expectation,” said Derek Chan, head of research at Ricacorp Properties. “The smaller [price] increase in March is driven by seasonal factors. We usually see a quiet market after the Lunar New Year holiday, a traditional peak season for the property market. ”
Home prices have risen by 4.6 per cent in the first three months this year, accelerating from 2.8 per cent growth in the fourth quarter, Ricacorp Properties said. The agency expects the growth rate will ease to 2 to 3 per cent in the second quarter.
“We will see a slowdown in the rate of increase in the secondary home market along with the introduction of more new homes in the following months,” said Chan.
The average price for flats smaller than 430 square feet in New Territories increased the most in percentage terms in March, rising 1.9 per cent on month, or an average of HK$12,413.7 (US$1,581) per sq ft.
Flats in layouts between 430 sq ft and 752 sq ft saw prices deflate during March. Units of this size eased by 4.3 per cent on month to HK$10,531.5 per sq ft in the New Territories, while on Hong Kong Island they were down 4.2 per cent to HK$15,655.4 per sq ft, according to government data.
The broad market price trend could falter in the second half, amid supply increases towards the end of 2018, according to analysts.
“We will see potential supply likely remain at a high level for the next one to two quarters,” said Buggle Lau Kai-fai, chief analyst at Midland Realty.
Only 1,200 flats were completed in the first quarter of 2018, down from 4,900 units completed in the fourth quarter, according to statistics from the Transport and Housing Bureau released on Friday.
The authority estimated that 96,000 new private homes were likely to be sold in the next three to four years.
Louis Chan Wing-kit, Centaline’s managing director for residential department, expects price growth to flatten in May amid higher interest rates.
Chan expects Hong Kong’s prime lending rate to rise by 50 basis points by the end of the year, lifting the base rate from its current level of 5 per cent.
“Hong Kong may adjust the interest rate if there is another hike in the US in June,” Chan said. “It may help suppress the growth of home prices.”