Hong Kong’s lived-in home prices rose to a seven-month high last month, as buyers bet on the city’s economic recovery amid a decline in Covid-19 cases and the roll-out of a mass vaccination programme.
The price index for lived-in homes in February edged up 0.9 per cent to 384.5, the highest since July, according to figures from the Rating and Valuation Department. It was also the biggest gain since last May when the index gained 2.3 per cent.
The index has climbed 1.1 per cent in the first two months of this year, but it is still 3.2 per cent lower than the all-time high of 396.9 reached in May 2019.
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While home prices across all segments increased, homes measuring 1,077 sq ft to 1,721 sq ft saw the biggest jump at 2.4 per cent in February.
“Housing prices have shown a constantly upward trend and the rate of increase is accelerating,” said Derek Chan, head of research at Ricacorp Properties. Along with “vaccinations and the easing pandemic, the uptrend will continue.”
The lagging indicator reflects the actual market conditions in late January and early February. At that time, sales of first-hand new projects were rising, which drove the boom in second-hand turnover, Chan said. In addition, social distancing restrictions were further relaxed in early February, prompting buyers to enter the market.
The index’s rise came as Hong Kong’s benchmark Hang Seng Index reached its highest level since June 2018 even as the city’s unemployment rate of 7.2 per cent was at its highest since 2004 and a seasonal downturn in the property market during the Lunar New Year.
Rents fell 1 per cent in February, extending a three-month losing streak to 2.2 per cent and taking the overall decline to 12.7 per cent from the peak in August 2019, according to the official index.
Chan said home prices will continue to increase by some 1.5 per cent in March as sentiment in the property market continues to improve.
After the Lunar New Year in mid-February, the market picked up where it left, with turnover in primary and secondary markets continuing to boom, Chan said. Further easing of social distancing restrictions after a decline in the daily count of Covid-19 cases to single digits and the start of the vaccination programme has strengthened market confidence, he added.
Chan expects the lived-in house price index to increase by about 2.65 per cent to over 390 points in the first quarter, which would make it the largest quarterly increase since the third quarter of 2019.
He said property prices will continue to rise in the second quarter and probably reach a record high as the pandemic is brought under control in the city and there are indications of border reopening with the mainland.
Centaline Property Agency also felt that the worst was behind Hong Kong’s property market, putting the index on course to break the record in June.
Developers will actively launch new projects as the pandemic has eased recently and the property market has been on the rise, especially in the luxury housing segment, said Thomas Lam, executive director at Knight Frank.
“This year’s first-hand property sales are still very hot. Such purchasing power should continue into the second quarter,” said Lam.
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