Property prices in Hong Kong continue to set records

New records are being set every month, with highest point in August more than double that in 1999, but rents seem to be rising more slowly

PUBLISHED : Wednesday, 10 October, 2012, 12:00am
UPDATED : Wednesday, 20 June, 2018, 3:51pm

Hong Kong home prices are continuing to break records, while rents are rising at a slower pace and even dropping in some sectors, according to latest figures.

The difference in the trends of prices and rents might be a sign that demand for homes is decreasing, an analyst said.

According to data released by the Rating and Valuation Department yesterday, the overall price index of private residential units hit the highest point, 210.6, in August, a 2.1 per cent increase from July's 206.1.

The index uses the 1999 price level as the base point of 100.

The index climbed over the 1997 peak (172.9) last year and since March has been setting new records every month.

The biggest growth has been in smaller homes. Prices for the two smallest categories - flats smaller than 430 sq ft and between 430 sq ft and 750 sq ft - rose 2.3 per cent from July to August.

In terms of actual prices, flats smaller than 430 sq ft sold for an average of HK$10,305 per sq ft on Hong Kong Island that month, also a record in that category. Meanwhile, the overall rental index rose from 144.7 to 146.5, a 1.2 per cent rise in the same period, slower than the 2.2 per cent from May to June and 1.5 per cent from June to July.

In the category of the smallest homes, rents have been dropping on Hong Kong Island and Kowloon since June. Rents for larger homes continued to rise.

Edward Yiu Chung-yim, who taught real estate at the University of Hong Kong and now runs a research centre, said slower growth and even decreases in rents could reflect a change in actual demand.

"Rents reflect the actual demand for occupying the homes, such as the number of new families or foreigners staying in Hong Kong, while the price level reflects this basic factor but also money supply," Yiu said.

He added that today's super low interest rates had diverted most cash to the property market. Yiu estimated that actual demand may slip given that the retail sector had slowed down.

For now, that doesn't seem to be the case in remote Tin Shui Wai, where prices are catching up with the rest of the city.

Prices at Kingswood Villas in Tin Shui Wai registered the biggest growth among the 10 housing estates monitored by Centaline Property Agency.

In August, average transaction prices at Kingswood Villas were HK$3,723 per sq ft, an increase of 22.1 per cent from last December.

"The big jump in Tin Shui Wai is because prices were lagging behind the rest of Hong Kong, where prices … rose sharply last year," said Wong Leung-sing, of Centaline.