Print Edition - 2018-09-03 | MONEY
Hong Kong home prices hit new record
-, HONG KONG
Sep 3, 2018-
Hong Kong private home prices rose to another record in July, government data showed on Friday, but the prospect of rising interest rates was expected to cool one of the world’s hottest property markets.
Prices rose 0.82 percent in July from June, extending a 28-month run of price increases, the longest such period in a city cited as one of the world’s least affordable housing markets.
Prices have surged 11.6 percent so far this year, and rocketed 16.6 percent year-on-year, according to an index compiled by Hong Kong’s Rating and Valuation Department.
A 650 square foot (60.4 square metre) flat on Hong Kong Island costs an average of HK$11.6 million ($1.48 million), according to July data from property agency Midland Realty.
Soaring real estate prices have angered many Hong Kong residents and prompted the city government to set aside plots of land for public housing and propose a vacancy tax on empty new homes to discourage developers from hoarding.
Some property market watchers say they don’t expect the sector to remain bullish for long. The July price data showed the pace of the increase had slowed from June’s revised 1.85 percent rise over the previous month.
Property consulting firms have projected prices to grow at a slower pace or stay flat, while three banks, including Citigroup, UBS and CLSA, offered a more bearish outlook.
The market faces “the worst headwind in 15 years”, CLSA said in report last week that suggested prices could drop by 15 percent over the next 12 months.
“Hong Kong’s property market is having its worst combination of fundamentals in 15 years with rising interest rates, a slowing economy and a depreciating RMB (yuan),” said Nicole Wong, CLSA’s regional head of property research.
Hong Kong’s top banks increased mortgage rates by 10 basis points in August, and analysts expected them to raise prime rates for the first time in a decade later this year.
The new effective mortgage rates currently range from 2.25 to 2.35 percent.
Published: 03-09-2018 08:40