HONG KONG: Home prices in Hong Kong, the least affordable city in the world, hit another all time high in January, the latest government data shows. The home price index in January rose 0.62 per cent to 309 from 307.1 in December, extending a 10 month-rise, accroding to data from the Ratings and Valuation Department. On a year-on-year basis, prices rose 10.75 per cent. Prices have continued to rise despite government efforts to cool the sizzling property market by raising the stamp duty to 15 per cent of the transaction values across the board, exempting Hong Kong residents who do not own any property. Large units of 70 to 99.9 square metres saw prices up 0.73 per cent in January on month, while small units in size of 40 square metre or below rose 0.59 per cent. The rental index in January rose to 174.7, a gain on 1.04 per cent from December. It rose 3.5 per cent year on year, according to the Ratings and Valuation Department.
However, analysts said the price rise is likely to end in the coming months amid growing supply and likely interest rate increases. The city’s home prices are expected to fall 5 to 10 per cent in 2017 with about 20,000 units due to be launched, according to credit rating agency Standard&Poor’s. Heavier cooling measures and tightening capital controls on the mainland can also create pressure on property prices, said S&P analyst Matthew Chow. “The government definitely needs to do something,” Chow said. “They will likely roll out some demand-side policies going forward to keep prices under control.” Chow said the Hong Kong Monetary Authority might also lower the loan-to-value ratio to curb home buying. “At the same time, liquidity is still abundant and Hong Kong households do have strong balance sheets,” Chow added. “When the correction happens, it won’t be a huge one.”
