The prices of lived-in homes in Hong Kong gained for a 25th straight month as the world’s most expensive property market shrugged off concerns about increased supply and an imminent rise in interest rates. Flats at the smaller end of the spectrum saw the greatest price gains as flats in major housing estates sold at record prices. An index of secondary-market home prices climbed 1.84 per cent to 375.9 in April, according to data released by the government’s Rating and Valuation Department on Thursday. That is faster than the 1.15 per cent gain in March. The rental index advanced 0.42 per cent to 190.3, indicating an increase in leasing costs, the figures showed. Hun Hung Kai sells out in Tuen Mun as first-time buyers led demand “Buyers are willing to chase after higher prices. They worry that flats will become more expensive if they do not act now,” said Derek Chan, head of research at Ricacorp Properties. “That explains why more homes have sold at record prices.” The market has digested the likelihood of imminent interest-rate rises and the effect that will have on mortgage repayments, he said. Hong Kong’s housing shortage will not be eased any time soon, he added. Owners just require paying an additional HK$205 (US$26.12) per month for every HK$1 million mortgage loan they borrow on a 30-year term once a 0.5 percentage point increase interest rate, according to agents. The secret to selling property in Hong Kong is in the name “It is widely expected that mortgage rates will increase by 0.5 percentage points this year. Such a small increase is unlikely to hurt buying sentiment, so home prices will continue rising,” said Chan. Strong buying demand has pushed transaction prices at 30 Hong Kong housing estates to record highs, say agents. For instance, a 549 square feet unit at Kingswood Villas in the northwestern New Territories district of Tin Shui Wai sold for HK$6.2 million, the highest price for a unit of that size on the estate, said Many Wells Property Agents, which focuses on brokering flats in the New Territories. Prices for smaller flats less than 430 square feet in size gained 1.94 per cent to 414.3 on the index. Much larger homes, greater in size than 1,722 square feet, increased just 0.15 per cent to a reading of 328.4. In a survey conducted by Centaline Property Agency, results indicated more than 690 studio flats, or 71 per cent of this category due to be completed in 2019, had sold as of April, indicating the growing appeal of tiny flats. Thomas Lam, senior director at Knight Frank said most home sales are currently dominated by the small- to- medium-sized flat market. “Price growth pace will slow in the second half of this year, after a fast start in first six months of the year,” he said. Land sale at Hong Kong’s former airport site breaks another record The positive mood among homebuyers has been further boosted by the sale of a large residential site in Kai Tak for HK$25.16 billion, or HK$17,776 per square foot, to Sun Hung Kai Properties on May 15. The record price paid at auction for a parcel of land at the site of the city’s former airport showed confidence in the property market outlook, according to analysts. The land price was even higher than the city’s average home price of HK$13,042 per square foot in April, according to data from Midland Realty. Home prices have gone up 4.96 per cent since January, said Midland.