Hong Kong’s home prices gather speed in April, rising at the fastest pace in more than six years
- Price index of used homes jumps 3.2 per cent to 390.5 in April, according to figures from the Rating and Valuation Department
- April’s rise was higher than the 3 per cent seen in March
Hong Kong’s pre-owned home prices rose at the fastest pace in more than six years, stretching a four-month rally, but analysts expect the uptrend to taper off as buying interest has been adversely hit by the escalating US-China trade war.
The price index of used homes rose 3.2 per cent to 390.5 in April, faster than the 3 per cent growth in March, according to data released by the Rating and Valuation Department on Friday.
The growth is the fastest for 74 months since February 2013, when a 3.23 per cent rise was recorded, said Derek Chan, head of research at Ricacorp Properties.
“The figure reflects the market before trade war escalated, when market sentiment was good,” said Chan. “Buyers entered the market enthusiastically so there was a large growth.”
Hong Kong’s home sales flop for a second weekend as trade war bites
Chan said the government was likely to monitor the market closely because in the past it has taken action whenever prices have risen more than 3 per cent for two straight months.
He expects the growth will slow down to less than 2 per cent in May amid souring market sentiment as the trade war continues.
“This time, the market is not as panicked and worried as it was the last time,” said Chan. “So there is no large scale price cutting to offload stock.”
Home prices in Hong Kong have rebounded 8.7 per cent from January to April this year after a 9 per cent fall between August and December.
Home prices hit a record high for the week ended May 26, with the Centa-City Leading Index breaking through last August’s peak to 189.42. The timely home price index, compiled by Centaline Property Agency, tracks 100 housing estates.
“The effect of the US-China trade war on the housing market has not been fully reflected,” said Wong Leung-sing, senior associate director of research at Centaline. “About 70 per cent of the transactions had the provisional sale and purchase agreements signed in the week after the US announced tariff hikes on Chinese goods.”
Wong said the effect will emerge in the coming weeks and the index will fluctuate until the trade war negotiation yields some significant progress.
Lee Shu-kam, associate head of the department of economics and finance at Shue Yan University, said home prices will remain volatile and could rise or fall up to 5 per cent because of the uncertainties surrounding the trade war.
He said that buyers have been scared after US President Donald Trump raised tariffs, which could result in prices falling in the summer when transactions decline because of people going on holiday. “The market will soon factor in these developments and home prices will rise again,” he said.
Hong Kong’s housing market sentiment cools as US-China trade war escalates
Both investors and end users have held back their purchases after losses on the stock market. The city’s benchmark Hang Seng Index has lost 8.5 per cent in May as of close on Thursday.
As a result, the mass market remains downbeat. Only 159 transactions were recorded in 10 major used private estates in May, down 35.6 per cent month on month and the lowest this year.
“The result of the trade war negotiation remains uncertain so the transaction volume in June will shrink [further],” said Kenneth Chiu, senior regional sales director of Taikoo Shing at Centaline.
The number of mortgage applications in April dropped 4.3 per cent month on month to 15,026.
Notably, sales of new homes have been disappointing for two straight weekends, with Maya by Nouvelle in Yau Tong selling just two flats out of 86 on offer last Saturday, as the trade war has made potential buyers hesitant.
