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The home price index edged 1.07 per cent higher to 347.0, according to data released by the Rating and Valuation Department on Friday. Photo: Nora Tam

Hong Kong home prices rise for a 20th straight month as flats keep setting new records

Hong Kong’s secondary home prices rose for a 20th straight month in November, their longest rally since 1993, as apartments continued to sell for record amounts across the city.

The home price index edged 1.07 per cent higher to 347.0, according to data released by the Rating and Valuation Department on Friday. That compared with a gain of 0.73 per cent in October.

It was also the 13th consecutive month in which the index had reached a new record high.

“Due to the limited units on offer in the secondary market, vendors will not sell unless they receive ultra-high purchase offers. That explains why units have been selling for record prices in various housing estates, and why this trend will continue,”said Derek Chan, head of research at Ricacorp Properties.

On Wednesday, a 617 square-foot unit at Sunshine City, Ma On Shan, changed hands for HK$9.28 million, or HK$15,041 per sq ft, the highest on record for that housing estate, according to Ricacorp.

A 1,280 sq ft duplex at Kingswood Villa in Tin Shui Wai, close to the Hong Kong-Shenzhen border, sold for a record HK$13.6 million during the Christmas holiday, the agency said.

“Home prices have risen for a 20th straight month, and that’s the longest uptrend cycle since the government started releasing its home price index in 1993,” said Chan. “Hong Kong home prices also kept on breaking records for a 13th straight month in November, which is the second-longest streak.”

According to government data, the longest succession of new record highs was in the 17 months between May 2014 and September 2015.

However, the number of transactions in the secondary market remained low in November, according to Chan, as fewer existing home owners were willing to upgrade their apartments in light of the heavier stamp duties introduced by the government.

As part of a raft of measures aimed at cooling the property market, there is a 15 per cent stamp duty on purchases of second flats and a 15 per cent special stamp duty on units that are resold within three years.

The number of registered transactions in the secondary market between the start of this year and November was 40,918, according to Midland Realty, compared with more than 70,000 deals recorded in the whole of 2012, before the curb was introduced.

Property consultants predict home prices will increase a further 10 per cent to 20 per cent in 2018 as demand remains strong.

Home prices have risen 14 per cent since January, according to Centaline Property Agency, making it even harder for young people to get on the housing ladder in what is already the world’s least affordable city to live in.

Midland Realty said the average price for used homes stood at HK$12,005 per square foot last month.

Chief Executive Carrie Lam Cheng Yuet-ngor faces rising pressure to increase land and housing supply to rein in the red-hot property market.

In September, Lam unveiled details of a “Starter Homes” scheme to help first-time buyers get on the property ladder. The flats under the scheme will cater to young families who earn too little to afford private housing but too much to qualify for public rental flats.