Hong Kong property

Hong Kong secondary home prices rise for 19th straight month in October

Large flats 753-1,075 square feet rose 0.89 per cent, though analysts see the pace of increases slowing in coming months

PUBLISHED : Thursday, 30 November, 2017, 11:19am
UPDATED : Thursday, 30 November, 2017, 11:30pm

Hong Kong’s secondary home prices rose for the 19th straight month in October led by gains in large-sized flats, government figures showed.

The home price index rose 0.53 per cent to 342.4, according to data released on Thursday by the government’s Rating and Valuation department. That compared with growth of 0.35 per cent in September, the data showed.

“Growth momentum will turn slower in coming months,” said Thomas Lam, senior director at Knight Frank, although he noted that prices could still increase by up to 12 per cent in 2018.

Macquarie forecasts home price could grow 10 per cent due to demand continuing to outstrip supply.

The price of homes sized 753 square feet to 1,075 sq ft rose 0.89 per cent in October, the biggest gain among all categories, while flats larger than 1,722 sq ft saw prices decline 0.16 per cent.

There were only two estates – Tai Hing Garden in Tuen Mun and Kingswood Villas in Tin Shui Wai — selling flats at below HK$10,000 per sq ft during October, according to 50 housing estates monitored by Ricacrop Properties.

“That compares with six in January this year and these types of flats may not exist anymore if prices continue to rise,” said Derek Chan, head of research at Ricacrop Properties.

Midland Realty said average prices for used homes were HK$12,000 per sq ft in November,

The market was stoked by a residential site in Cheung Sha Wan which sold for record HK$17.28 billion a fortnight ago, and apartments in some selective housing estates achieved record high prices too.

A 742 sq ft three bedroom flat at Belvedere Garden near Tsuen Wan changed hands for HK$9.28 million on Wednesday, the first to top HK$9 million in the estate, according to Centaline Property Agency.

[There were only two estates selling flats at below HK$10,000 per sq ft during October]
That compares with six in January this year and these types of flats may not exist anymore if prices continue to rise
Derek Chan, head of research at Ricacrop Properties

It projects total residential transactions in the secondary market could be worth HK$29 billion this month, up 11 per cent from October, and the actual number of second-hand home sales to increase 12 per cent to 3,900.

However, the International Monetary Fund (IMF) issued a report on Wednesday highlighting the risk of overvaluation of Hong Kong home prices has increased.

It calculated Hong Kong property prices saw a year on year 15 per cent rise in September despite a series of measures introduced by the government under the imbalance of supply and demand in the market.

“IMF staff analysis suggests that the degree of overvaluation has increased . The sensitivity of household debt to interest rate changes remains high as a significant portion of new mortgages are on floating rates and indexed to the Hibor.

“In addition, a disorderly housing market adjustment could have a significant impact on private consumption through negative wealth effects,” it said.

The monthly rental index for private homes rose 0.43 per cent to 187.1 in October, government data showed.