Hong Kong home prices rise at slowest pace in four months as government policies show teeth
Hong Kong’s residential property prices rose at the slowest monthly pace in four months in May, as the prospect of higher interest rates and an April government stamp duty to cool the market finally began to show their effects.
May’s home prices rose 1.15 per cent, slowing from April’s increase of 2.55 per cent, according to data from the Rating & Valuation Department. In the second-hand market, a monthly home price index rose for the 14th consecutive month to 333.1 in May, from 329.3 in April.
Average home prices were 20.8 per cent higher in May than a year ago, a record level that puts Hong Kong at the top among the world’s major urban centres, posing one of biggest challenges for incoming chief executive Carrie Lam Cheng Yuet-ngor and her cabinet members to solve. The new team will take over amid an uptick in interest rates by the Hong Kong Monetary Authority (HKMA), whose monetary policies are tied to the US Federal Reserve because the Hong Kong dollar is pegged to the US currency.
“Home price growth will continue to ease,” said Knight Frank’s senior director Thomas Lam. “I expect the new government will issue new curbs to cool the market, while the Hong Kong Monetary Authority will take action first.”
On April 12 the government closed a loophole that allowed buyers of multiple properties to put the purchases on a single contract, which subsequently forced them to pay a 15 per cent stamp duty on each property. This move was reinforced by the HKMA’s tighter mortgage rules, which required buyers to put down more money for properties, while cutting the loans available.
Four weeks after the new policies, the increase in home prices has begun to taper off.
Centaline Property Agency’s latest Centa-City Leading Index, which reflects sales at 100 large housing estates across the city, recorded its first weekly decline after rising for 19 consecutive weeks. The index eased 0.48 points to 159.12 in the week that ended June 18, compared with a week earlier.
But it picked up again, climbing to 160.23 for the week ended June 25. Home prices have surged 99.2 per cent over the past two decades, after Hong Kong was handed over to the mainland in 1997.
Now, forecasts are for property prices to fall by as much as 30 per cent over the next 12 months, agents said.
Ignoring the grim outlook, Cheung Kong Property (Holdings) released the price list for its project in Tsuen Wan.
The first 288 units at Ocean Supreme, Phase 3A of the Ocean Pride development located next to the Tsuen Wan West railway station, is priced at an average of HK$16,877 per square foot after discount, the developer said on Friday. Unit sizes range from 497 sq ft to 1,138 sq ft.
The latest batch of units are 7 per cent higher that Ocean Pride flats launched last month.
“Units are being offered for HK$7.12 million to HK$22 million after discount of up to 22 per cent,” said William Kwok, a director of the developer’s wholly owned subsidiary Cheung Kong Real Estate.
Ocean Supreme, comprising 1,463 two to four-bedroom flats, will be completed in 2019.
Buyers opting for staggered payments would receive a 20 per cent discount, while those paying cash will receive a 22 per cent discount.
Those choosing staggered payments won’t need to take out mortgages until the flats are completed in 2019, and those choosing cash payment need to complete the transaction in 180 days.
The price is also 53 per cent higher than Sun Hung Kai Properties’ Park Yoho Genova in Kam Tin, one stop after Tsuen Wan West station.