Prices in Hong Kong apartments surge for the 21st month this December, and we see more gains this year.
Last month saw the rise of the City’s home price index by 1.4% which is the longest run of gains seen since 1993, and with the stock market enjoying a boom and creating wealth, prices are expected to keep rising.
Prices of secondary Hong Kong apartments also increased for the 21st month during December, which also marks the longest running consecutive gains since 1993. This was mainly driven by the rising demand for small-sized flats, with experts expecting the rise in demand to rise further in 2018.
According to Wednesday’s report by the Valuation and RatingDepartment, Hong Kong’s house price index increased to 352.8 representing a 1.4 percent rise. Compared to November’s 1.22 percent rise, the market performed slightly better in December than in November, showing a trend that is expected to continue well into 2018. Small flats with lower than 430 sq feet had the fastest rate of price growth with a 1.54 percent growth recorded in December.
Hong Kong’s rising property demand has been fuelled by various contributing factors. First, property performs well in the Hong Kong stock market, which leads to prices of city residential units rising to record highs making them unaffordable to most people. As a result, people are scrambling for smaller, cheaper apartments causing a sharp rise in their demand which in turn leads to their price growth.
Speaking on behalf of Ricacorp Properties, the head of research Derek Chan observed that 22 out of the 50 housing estates they monitor had set record prices on their properties. He also noted that if this trend continues and the price of Hong Kong apartments continue to rise, prospective buyers will only be able to afford micro-flats with sizes smaller than 200 square feet. Of the 22 estates, seven were in Kowloon, two were at the Hong Kong Island, while the rest were at the New Territories.
Fairview Park located in Yuen Long which is in New Territories had the highest recorded Price gains which was a 29.3 percent rise recorded in the last 12 months. Following closely, the Bellagio at Castle Peak Road came in second with a 26.3 percent rise within the same period. Ricacorp data shows Fairview Park prices have risen from HK$9,875 to HK$12,771 in January 2016.
Chan said that out of the estates being observed, Kingswood Villas located atTin Shui-Wai in New Territories were the only estates which still had flats going for less than HK$10,000 per sq foot, with the transaction prices averaging at HK$9,426 per square foot. Chan expects that in the next six months, flats worth less than HK$10,000 per square foot will completely disappear from the market. This is as a result of high demand causing rapid price growth.
In general, the overall real estate market in Hong Kong has flourished this month, with investors and buyers spending over HK$ 64.89 billion on various types of property like shops, flats, industrial units, car parking spaces, and also Hong Kong apartments. The average home price in Hong Kong now is at HK$ 12,137 per square foot as shown by Midland Realty figures. Developers are taking advantage of current market conditions to hike prices of their new projects. The good news for them is analysts expect the home price growth to continue due to the impact of the robust stock market supporting demand for property and creating cash gains for investors.