The return of Hong Kong's residential property bull market tests the city government's policy response to tame runaway prices

Sandy Li and Lam Ka-sing
May 6, 2019 3:52 PM SGT
The prices of Hong Kong's pre-owned homes rose 2.9 per cent in March from the previous month at their fastest monthly pace in about three years, as the city's government struggles with policy responses to keep runaway prices in check.
The price index of pre-owned homes rose to 377.5 in March, according to Rating and Valuation Department data. Prices have risen by 5.04 per cent in the first quarter of 2019 in a three-month rally, recovering from a 9.2 per cent decline from August to December last year. The last time the price of lived-in homes climbed by a similar magnitude was in September 2016, when the gauge rose by 3.1 per cent.
"Buyers' attitude towards the property market has taken a U-turn. The overall sentiment has improved," said Ricacorp Properties' research head, Derek Chan. "There is not much supply in the market for used home to match the pent-up demand by buyers, so that's why prices have been pushed higher."
The leader of Hong Kong's government, Chief Executive Carrie Lam Cheng Yuet-ngor, on March 21 expressed concerns about the city's housing affordability, as dovish monetary policy rekindled a cooling property market.
Lam added a failure to effectively handle Hong Kong's housing problem would undermine her achievements as the city's leader.
Apartments smaller than 430 sq ft have seen the largest growth at 3.12 per cent. "When the market turns, small to medium sized flats will have a bigger change because their values are lower and more people in the market can afford them," Chan said.
But he said the growth next month may slow down to 2 to 2.5 per cent after touching the 3 per cent threshold.
"The March figure is 4.38 per cent below the peak," said Chan. "It may hit the peak in May or June. It may mark a new high in the first half of this month."