Buying fever starts cooling down

Property | Staff reporter 5 Aug 2021

Property prices have been rising for the last few months and are now on the verge of returning to historic highs. Coupled with increases in transaction volume, this has pushed up mark to market valuations.

A number of blue-chip housing estates saw increases in their valuations slow over the past month. However, valuations at several tier-two housing estates have outperformed the market.

Overall, the increases have narrowed compared with the second quarter, with 15 out of the 20 index estates seeing increases ranging from 0.2 to 4 percent in their latest valuations.

Valuations at three out of the four remaining estates stayed flat, with only one decline recorded, reflecting a more aggressive stance taken by banks.

According to the Rating and Valuation Department, the private domestic price index has risen for the fifth consecutive months. It also said the latest index has hit a two-year high - just short of a historic record.

Louis Chan Wing-kit, Asia-Pacific vice-chairman of the residential division at Centaline Property Agency, said medium and small units priced under HK$10 million were popular, and this was reflected in the increase in valuations.

He also said that over the past three years,Tseung Kwan O has developed rapidly and become a favorite for many who want to get on the property ladder.

In addition, although valuations for Nan Fung Center units in the same area have increased, they are still popular with buyers eyeing properties valued below HK$10 million, he said.

The launch of new properties in Kowloon will help boost valuations, he added.

Vincorn Consulting and Appraisal managing director Vincent Cheung Kiu-cho said the infrastructure near a property is a major factor that affects prices and valuations. Kowloon and the New Territories have benefited in recent months from an improved rail network and have seen more pronounced increases in valuations.

The increases were less obvious on Hong Kong Island due to the already high prices there, he said.

Of the estates, Nan Fung Plaza in Tseung Kwan O saw the highest increase in valuations last month.

A 697 square foot unit saw its valuation increase 4 percent from HK$9.23 million in June to HK$9.6 million last month. This came after a 4.5 percent rise - the third highest among the 20 index estates - in June, resulting in a compound surge of 8.7 percent in just two months.

The second highest increase was at Telford Gardens, which saw an increase of 3.4 percent.

The upward trend of June's best performer, Chestwood Court, Kingswood Villas, slowed in the second quarter. A 458 sq ft unit saw its valuation rise 1.2 percent to HK$5.07 million last month, down from a previous record of 6.8 percent.

Kornhill was the only estate that recorded a downward trend. The valuation for a 596 sq ft unit estimated at HK$11.01 million in June fell 0.5 percent to HK$10.96 million last month.

As prices rose, overall transaction volume fell in recent months.

Estates that saw significant increases in valuations inthe second quarter are expected to record smaller increases in the third.

In response to this, banks are expected to adjust valuations accordingly, taking the latest valuations into account.

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September 2021

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