Hong Kong home prices hit 13-year high

Mar 14, 2011 - PropertyGuru.com.sg

 

Hong Kong’s home prices have accelerated to a 13-year high in the week ended 6 March, raising concerns about the effectiveness of government efforts to cool down the sizzling real estate market.

The Centa-City Leading Index, compiled by Hong Kong's largest closely held realtor, surged 1.7 percent during the week to the highest since October 1997, said Centaline Property Agency Ltd.

The agency added that the index had been ascending for five straight weeks.

In November, the Hong Kong government heightened a year-long battle to restrain housing prices by announcing additional property transaction taxes and pledging to boost land supply for small and medium housing units.

Home prices in the city-state have increased 65 percent in the past two years, driven by the economic recovery, record low mortgage rates and an influx of mainland Chinese buyers.

“It just shows that any government intervention would be ineffective in the face of strong demand,” said James Cheung, a surveyor at Centaline.

“With the way the economy has been growing, there are many people looking to upgrade to bigger apartments. There is just not enough supply in the market to meet this demand.”

Data from the city's Land Registry showed that the number of home sales rose 30 percent in February from the earlier month. The 10,390 sale-and-purchase agreements recorded fetched a combined HK$45.6 billion (S$7.45 billion). This was 37 percent higher from January and 12 percent more than a year ago, it said.

A January study conducted by London-based Savills named Hong Kong the world’s most expensive place to buy a home, due to a shortage of supply.

However, Thomas Kwok, Vice-Chairman of Sun Hung Kai Properties Ltd, the city's largest developer by value, said that home market fundamentals are “positive”.