Demand causes surge in Hong Kong home prices

Prices in one of the world's most expensive property markets gained for the seventh month in a row

Hong Kong private home prices rose 0.46 per cent in July, according to official data. Reuters

The prices of private homes in Hong Kong rose 0.46 per cent in July, official data showed on Friday, just short of a record high.

The increase is driven by strong pent-up demand and hopes that mainland Chinese buyers will soon return.

The prices in one of the most expensive property markets gained for the seventh month in a row, according to last month’s data, and compared with a revised 0.1 per cent increase in June.

Estate agents expect the price index, which stood at 396.3 in July, will break the 396.9 record posted in May 2019 in the third quarter.

“A high turnover in the market is positive for buyers’ sentiment,” said Thomas Lam, executive director of Knight Frank. “The buying power can persist into end of year.”

According to an index by estate agent Centaline that tracks the secondary home market, prices broke a historical high in early August, before softening 0.5 per cent in the following week.

The agent said potential buyers were now turning more cautious to chase after record high prices.

Another real estate agent, Midland, expects overall home prices could increase at a slower pace until the border with mainland China reopens.

In a survey published last month, Midland, who interviewed 1,112 people, said the percentage of respondents showing their willingness to buy a property and buying for investment both reached the highest levels, and 51 per cent of respondents said they expected prices to rise in the next six months.

Hong Kong’s one-month interbank rate, to which many mortgage rates are linked, stayed above 11-year lows and also helped to support the market.