In February, Hong Kong’s private home prices increased by 2.2 per cent for the second consecutive month, owing to improving sentiment after the reopening of the border with China, expectations that interest rates have peaked, and numerous new project launches.
The official data released on Wednesday (Mar 29) revealed that the rise in home prices in February was the largest since May 2020, following a revised 1 per cent gain in January.
Survey company Demographia recently ranked the financial hub as the world’s least affordable city in 2022. It is based on property prices versus median income, with Sydney and Vancouver following closely behind.
This was the 13th consecutive year that Hong Kong has topped the ranking.
“Hong Kong has been given a clear responsibility by the central government to improve housing affordability, and increase house sizes,” Demographia said in its report last week.
Beijing identified unaffordable housing as a key cause of discontent in the former British colony. This is especially among the city’s youth, and a driving factor in the sometimes violent anti-government protests of 2019.
Some analysts have raised their 2023 forecasts for housing prices in the city over the past few weeks, expecting a reversal after home prices fell by about 15 per cent last year.
The fall in 2022 was the first annual drop since 2008. With the property market dragged down by a weak economic outlook, rising mortgage costs and a COVID-19 outbreak at the beginning of the year.
Expected rise in 2023
JP Morgan analyst Cusson Leung said he expects a 10 per cent to 15 per cent rise this year, driven by a slowing pace in interest rate hikes, a stronger economy and increased purchases by non-locals.
“The significant pick up in high-end residential transactions is a strong vote of buying confidence in the Hong Kong housing market,” Leung said in a report.
Recent primary housing projects also recorded strong purchase rates at their launches, Leung said.
Realtor Cushman & Wakefield expected home prices to rise 5 per cent to 10 per cent for the full year. Revising its previous forecast of a flat market to a 5 per cent drop. And said transaction volumes would rebound 25 per cent to 35 per cent.