Hong Kong’s private home prices, one of the world’s most expensive property markets, rose in March at their fastest pace since September 2016 on strong pent-up demand and improved sentiment.
Home prices in the densely-populated city gained 2.9 percent last month, the third straight rise and accelerating from February’s revised 1.6 percent increase, government data showed on Tuesday.
Hong Kong’s home prices fell from August to December last year weighed by U.S.-China trade tensions and higher interest rates after rising for 28 consecutive months, but then quickly rebounded since the beginning of this year.
“The rise is higher than expected,” said Thomas Lam, executive director of Knight Frank. “If the index continues to rise in the next two, three months and there are no other negative factors, housing prices will see another uptrend in the short term.”
Over the past decade, ultra-low interest rates, limited housing supply and large capital flows from mainland Chinese buyers into the financial city on China’s doorstep pushed housing prices up more than 200 percent, angering many Hong Kong residents who could not afford to jump on the bandwagon.
Property consultancy CBRE named Hong Kong the least affordable housing market for the eighth year in a research report published earlier this month, with an average property costing $1.2 million or $2,091 per square foot. That compares with Singapore, ranked the second priciest, at $874,372 and $1,063, respectively.
Another consultancy JLL said on Monday the drop in stamp duties levied on non-first time and foreign homebuyers in the first quarter suggested the bulk of buyers were local first-time purchasers.
As the property market starts to revive, developers are selling new launches at higher prices than a few months ago.
Last week, New World Development and Henderson Land launched their joint high-rise residential development in Kowloon at a floor price 10 percent higher than the neighbourhood. Analysts expected developers will offer less attractive selling prices than last year going forward.
In the first quarter, developers sold a total of 5,532 new flats in the first three months, the highest in 10 quarters. The figure was up 70 percent from the previous quarter and 44 percent from a year earlier.
Property developers also became more active in land auctions. A land plot in the New Territories received 11 tenders last week, according to Hong Kong media, a high in recent months despite the record-asking price of the area. ($1 = 7.8440 Hong Kong dollars)
By Clare Jim; Editing by Jacqueline Wong