Hong Kong’s March price index for lived-in homes advances to 20-month high as property buyers return in droves to the market

Sandy Li
·4-min read

Hong Kong’s lived-in home prices rose to a 20-month high in March with luxury flats recorded the sharpest growth as cash-rich investors and buyers turned bullish towards the outlook of the city’s property market.

The price index for lived-in homes advanced by 0.8 per cent in March to 388.3, the highest since July 2019, according to figures from the Rating and Valuation Department on Wednesday.

“The increase is driven by [demand for] luxury homes,” said Thomas Lam, executive director at Knight Frank.

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Apartments measuring at least 160 square metres (1,722 square feet) have outperformed the market, with the average price rising 3.6 per cent in March compared with a month earlier. The price for flats measuring between 70 and 100 square metres rose 1.6 per cent while the smallest units smaller than 40 sq metres were the least in demand, with prices edging up by 0.9 per cent, according to the data.

Wealthy buyers, mostly comprising mainland Chinese who have obtained residency status in Hong Kong, forked out HK$4.1 billion (US$528 million) buying villas in the primary and secondary markets last month, up 158 per cent from HK$1.6 billion in February, according to data from Centaline Property Agency.

“Owners have reduced the room for negotiations and some even marked up their asking prices after seeing a fall in confirmed Covid-19 cases from late March,” said Derek Chan, head of research at Ricacorp Properties. “Further relaxation of social distancing measures will lift market sentiment.”

Potential buyers of Wheelock Properties’ Grand Victoria development in Cheung Sha Wan at the developer’s sales office in Olympian City in Tai Kok Tsui on March 13, 2021. Photo: Edmond So
Potential buyers of Wheelock Properties’ Grand Victoria development in Cheung Sha Wan at the developer’s sales office in Olympian City in Tai Kok Tsui on March 13, 2021. Photo: Edmond So

Monthly home prices may rise cumulatively by 4.6 per cent in the second quarter ended June, and the price index would climb to a record 400 in May or June, Chan said. In the first three months, home prices advanced by 2.2 per cent, the largest growth in the past seven quarters since the third quarter in 2019, he said.

Monthly home prices may rise cumulatively by 4.6 per cent in the second quarter ended June, and the price index would climb to a record 400 in May or June, Chan said. In the first three months, home prices advanced by 2.2 per cent, the largest growth in the past seven quarters since the third quarter in 2019, he said.

“It reflects the reversal in the downward trend in home prices seen in the past two quarters,” said Chan.

On Tuesday, a third of respondents to the Citibank Q1 2021 Residential Property Ownership Survey said they believed that property prices would rise this year, up from 16 per cent in the same period last year, while 47 per cent expected them to remain stable, up from 28 per cent last year.

Hong Kong home prices are still down by 2.2 per cent from the peak in May, 2019. With the decline in Covid-19 cases and the roll-out of a mass vaccination programme, Knight Frank’s Lam expects developers to actively market their new projects to capture improving sentiments.

Developers are expected to release 500 new homes in three new projects this weekend, coinciding with the Labour Day holiday, the largest weekend sale since September 2020 when more than 730 units were put on sale.

Road King Infrastructure and Ping An Insurance will launch The Southland, their joint project with MTR Corporation, atop Wong Chuk Hang MTR station. Sino Land will debut its joint venture One Soho development in Mong Kok by putting the first 168 units on the market, while Sun Hung Kai Properties will release 82 units in the second batch of sales of its Regency Bay Phase Two development in Tuen Mun.

“Sales of new homes this year will still be very hot, and the purchasing power [in Hong Kong] can be sustained until the third quarter,” Lam said.

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