Finally, some good news for the island’s property market
After government cooling measures stalled the property market in March, transaction volumes and prices rebounded for the second consecutive month in Hong Kong’s residential sector.
The rapidly increasing prices seen in the property market in the first two months of this year led to stringent government cooling measures in February that, although not doing a lot to dampen price growth, suppressed transaction volumes the following month by as much as 30 percent.
According to new reports by Knight Frank and JLL, however, Hong Kong’s residential sector is back in business with May being the second consecutive month of increased transaction numbers in addition to steadily increasing prices.
The total number of residential sales transactions reached only 4,329 in March of this year; April enjoyed an increase to 4,549 while May figures consolidated the growth trend at 5,168, according to Knight Frank data.
Transactions within the luxury segment were the main winners last month. Residential sales priced at HKD10 million (USD1.3 million) and more exceeded the 700 mark in May, the highest volume seen in 2015 so far. Knight Frank postulates that this shows a purchasing shift from the mainstream to the luxury segment as the government cooling measures were aimed at the small- and medium-sized homes.
Gains were also seen in the mainstream market under HKD10 million, with transaction numbers rebounding to 4,444 in May. However, this still comes in considerably below the 5,000 and more figures released in January and February of this year.
Like in previous years in Hong Kong, residential prices showed no signs of quieting in the first five months of the year. Luxury sales enjoyed prices rises of 1.4 percent while the mass market prices increased by 7 percent during the January to May period. As always, limited supply and strong demand are driving Hong Kong’s price increases: luxury prices are set to increase by 5 percent over 2015 and the mass market by 5-10 percent, according to Knight Frank.
Developers are working to meet the increasing demand in Hong Kong’s property market, per JLL, particularly within the mass market segment. The reaction to recently launched projects such as My Place, located in To Kwa Wan, and The Beaumount II, in Tseung Kwan O, has been promising with the 168 and 872 respective units almost totally selling out within a month of their launches.
Demand is very much present for new build units packaged at reasonable prices with attractive amenities and services, according to Knight Frank.
Notable projects in the works include 23 Po Shan Road, which was recently purchased for HKD1.18 billion (USD152 million) by a group of local investors; the whole building in the Mid-Levels West neighbourhood will be redeveloped. Additionally, 32 developers had been invited to tender for the development of 160 units in Pak Tai Street in Ma Tau Kok.
Image is by Loïc Lagarde and is used under a Creative Commons licence
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Hong Kong’s residential sector might just be back in business