A man walks on a footbridge as a construction site is seen in the background, in West Kowloon. Hong Kong’s new home sales jumped to a record high in the first half of the year, driven in part by the return of Chinese investors seeking to park money in million-dollar mansions, underscoring the challenges the government faces in curbing property prices.
Reuters/Hong Kong
Hong Kong’s new home sales jumped to a record high in the first half of the year, driven in part by the return of Chinese investors seeking to park money in million-dollar mansions, underscoring the challenges the government faces in curbing property prices.
Despite a series of tightening measures to cool the market, sales jumped 42% from a year earlier to HK$89.6bn ($11.56bn) and prices rose another 7% to an all-time peak, real estate company Centaline Property Agency said.
Analysts said low interest rates in China and abroad would continue to drive cash-rich Chinese investors to the city’s high-end home sector amid hopes for higher returns in one of the world’s most expensive property markets.
Mainland Chinese accounted for 37% of new sales of luxury homes priced above HK$50mn in the first quarter, according to Midland Realty.
That was the highest since the end of 2013, but still below the peak of more than 80% at the end of 2012 before a 15% tax on foreign buyers that many industry watchers say was targeted at mainland Chinese.
“The Hong Kong government’s best property tightening measures have failed to defend against the easing policy from People’s Bank of China,” said Centaline research director Wong Leung Sing, referring to China’s central bank. The central bank cut lending rates last Saturday for the fourth time since November and trimmed the amount of cash that some banks must hold as reserves, stepping up efforts to support an economy that is headed for its poorest performance in a quarter century.
Developers and analysts are expecting a further 5 to 10% rise in Hong Kong home prices in the second half of this year, shrugging off concerns over an expected mild interest rate hike from the US Federal Reserve later this year.
The relentless rise in home prices has prompted renewed concerns that the government may place more property tightening measures such as stricter mortgage restrictions in order to puncture the trend.
The city’s de facto central bank in February cut the amount of money home buyers can borrow and lowered the debt servicing ratio for second-home buyers.
With a supply of up to 10,000 new units coming to the market in the second half from developers such as Sun Hung Kai Properties and Cheung Kong Property Holdings, Centaline expected full-year new home sales to swell to more than HK$200bn ($25.80bn) this year, easily beating last year’s existing record of HK$178bn.
Hong Kong’s home prices have jumped more than 170% since 2008 due to low interest rates and a supply shortage, shrugging off a series of cooling measures and posing policy challenges to the government of embattled leader Leung Chun-ying.
