Home price rise seen this year

Business | Jeannie Tang 8 Feb 2018

A survey conducted by Citibank has showed that 63 percent of Hongkongers believed that home prices would rise further, but 20 percent would still buy flats in the city even if prices were among the most expensive in the world.

A separate survey by CBRE showed that living in Hong Kong remains the most expensive among 29 key global cities. The average price of an apartment in Hong Kong is US$1.16 million (HK$9.05 million) or US$1,616 per square foot, according to CBRE. Singapore and Shanghai ranked second and third, respectively.

Shih Wing-ching, chairman of Centaline Property Agency, predicted Hong Kong's home prices to increase by between 8 percent and 10 percent this year at the Master Insight Forum.

He also said that the rate of return from investments in office premises will be higher than that in luxury residential properties.

Shih said the bubble in the mainland property market is more serious than in Hong Kong, adding there are no signs as yet of any potential bubble burst in the local market.

Three factors can be used to measure the bubble in the local market, he said.

The first is excessive construction, but there is no such phenomenon in Hong Kong. The second is excessive borrowing, but debt repayment in Hong Kong is healthy at over 60 percent. The last factor is when people's purchasing power is dissociated from property prices. However, high-income earners in Hong Kong still have ample purchasing power and they can absorb rises in prices which means the situation in the local housing market is not very serious, Shih said.

Meanwhile, Credit Suisse Asia Pacific managing director Tao Dong said Hong Kong's property market would track its mainland counterpart as the former moves synchronously with the latter.

However, declines in the local market would be steeper than those on the mainland because of the city's linked exchange rate system.

Centaline Property Agency said mainlanders accounted for a third of purchases of luxury homes in the fourth quarter last year.

In the secondary market, a 692 sq ft flat at Island Harbourview in Tai Kok Tsui was sold for HK$14.25 million. A three-bedroom apartment with a gross area of 520 sq ft at Yuet Lai Yuen in Kwai Chung was sold for HK$5.95 million.

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