Home prices in Hong Kong surge to 10-month high in June

Index shows that buyers are seeking safe-haven assets amid the outbreak

View of a public estate in Hong Kong. LeeYiuTung/Shutterstock

On Friday, South China Morning Post reported that Hong Kong’s home price index grew to its topmost level yet in 10 months in June as homebuyers seek for safe haven assets despite the third wave of infections that afflicted the city and the dreary outlook of the global economy. 

Data released by the Rating and Valuation Department showed that the index of used homes in June increased by 0.1 percent to 386.1, reaching its peak since 388.2 in August of last year. Unfortunately, the index declined by 1.9 percent in comparison to June 2019. 

The COVID-19 outbreak has also halted construction activity throughout the city, slashing the amount of new private residential units by 3,000 units to 92,000 for the next three to four years, based on figures from the Transport and Housing Bureau. Analysts explained that the dip in supply will help put a floor on home prices. 

More: Hong Kong’s new home sales thrive in June, reach 13th month high

“It is hit by the pandemic [as] the progress of construction was delayed,” said the senior associate director of research at Centaline Property Agency Wong Leung-sing, adding that new homes supply could drop below 90,000 units. “The epidemic has dragged down the sales of new homes, and the supply of new homes in the future will begin to decrease, which is a self-correction in the market.”  

As for recently launched and lived-in homes, prices have managed to hang on stubbornly even though its economy is about to experience the worst recession ever documented. A stream of cheap liquidity released by central banks has enabled investors to look for better returns in precious metals and fixed assets, inciting them to purchase new apartments during weekend launches. 

Executive director at Knight Frank Thomas Lam said that the latest data does not “reflect the impact from the recent uptick in virus infections,” which forecasts home price to fall by around 5 per cent this year. “Correction in the property market is likely to continue.”