Home prices' rebound forecast to lose steam

Private home prices rebounded for the second consecutive month by nearly 0.3 percent in April, thanks to the removal of housing curbs, but agents expect a retreat to come as early as this month.

The residential property price index rose to 308.7 last month, 0.29 percent higher than a month ago, data from the Rating and Valuation Department showed.

The recovery further narrowed this year's fall to 0.84 percent.

Prices of small and medium-sized flats increased by 0.32 percent month on month. Apartments from 79 to 99.9 square meters posted the largest monthly growth of 0.69 percent, while homes above 100 sq m inflated by 0.29 percent from a month earlier.

But the total growth in April slowed sharply from March's 1.8 percent jump. Moreover, the latest index still posted a 12.8 percent drop compared with a year ago and only approached the levels seen around January 2017.

The rental index, meanwhile, climbed for two months in a row to 186.9, up by 0.92 percent month-over-month and 4.6 percent year-on-year.

In April, the residential market continued to benefit from the cancellation of "spicy housing stamp duties," as developers sold over 7,000 new homes for about HK$90 billion in nearly three months, said Louis Chan Wing-kit, the Asia-Pacific vice chairman of the residential division at Centaline Property Agency.

However, the momentum of the housing stimuli is fading and the private home index could fall in May, Chan warned.

It comes as developers price their new homes at market levels to reduce inventory and some homeowners are forced to cut the selling prices in the secondary market.

Chan believes Hong Kong's market sentiment could be improved by a series of supportive policies by Beijing to boost domestic demand.

But Knight Frank is bearish. Its director and head of research for Greater China Martin Wong Shiu-kei anticipates that home prices will fall by as much as 5 percent in the first half, as interest rates might continue to stay high.

Meanwhile, Wheelock Properties expects the market to continue to recover in the second half of the year.

themis.qi@singtaonewscorp.com