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Hong Kong property
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Hong Kong’s second-hand home prices soar to a 23-month high as property bull run feeds on cheap money

  • An index of lived-in home prices rose to a 23-month high in May, a mere 0.8 per cent from its historical peak, according to government data
  • Prices of second-hand homes smaller than 431 square feet (40 square metres) increased 1.1 per cent last month to a record

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Residential buildings near the West Kowloon subway station in Hong Kong on Wednesday, May 6, 2020. Photo: Bloomberg
Lam Ka-singandBobo Chan
Housing affordability, one of the issues fuelling political strife in Hong Kong over the past few years, is rearing its head again as low interest rates fuel a speculative real estate frenzy while the economy grapples with budding signs of recovery from a pandemic-led recession.
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An index measuring the prices of all lived-in homes rose 0.6 per cent in May to a 23-month high of 393.7, a mere 0.8 per cent from its May 2019 historical peak, according to data released by the Rating and Valuation Department. Prices of second-hand homes smaller than 431 square feet (40 square metres) increased 1.1 per cent last month to a record 439.9, from a year ago.

The latest data shows how Hong Kong’s housing market has regained its footing from the street protests of 2019 and the coronavirus pandemic of 2020 to resume its bull run, as the trillions of dollars of low-interest capital unleashed by global central banks have found their way into fixed assets. Several new property projects such as New World Development’s The Pavilia Farm III project in Tai Wai and Henderson Land Development’s The Upper South in Ap Lei Chau were snapped up by buyers when they launched.

“Market sentiment has improved now,” said Derek Chan, head of research at Ricacorp Properties. “Supply is not high in the secondary market, so small homes have shown the most significant increases as [they appeal to] the mass market, with the strongest demand. Usually this happens in a rising market.”

Transactions of second-hand homes could top 5,500 in June, the fourth consecutive month for more than 5,000 residences to change hands, according to Midland Realty, which shows how the property bull market has extended into the lived-in segment. That’s also the longest streak of increases since November 2012.

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