It’s definitely good news for developers, but not for someone who, in the next two months, is expected to announce he’s running for a second term.
The Hong Kong Economic Journal reports that the prices of units at two leading housing estates in the city are at a year’s high.
But while the industry is saying that the end of a bearish property market is at hand, the government insists that we have over 10,000 residential units available for sale and supply will remain abundant in the foreseeable future.
If the property index continues to head north, what can Chief Executive Leung Chun-ying brag about by way of his achievement in making houses more affordable over the past four years?
Contrary to popular belief, we think it’s doubtful if the local housing market has become stronger under his reign.
Take a look at the latest transactions in two benchmark developments.
At One Shatin City, a standard one-bedroom unit was sold for HK$4.2 million, or 20 percent higher that it was four months ago.
The seller bought the flat for HK$2.8 million in January 2013, six months after CY Leung took office.
A similar situation was seen in Taikoo Shing, where the price of a three-bedroom unit returned to its previous level of over HK$10 million.
Like what happened in these two housing estates, the number of keys that landlords left with estate agents in 10 blue-chip developments plunged sharply by 25 to 85 percent.
In short, it’s back to a sellers’ market with buyers rushing to snap up units with little or no discount at all.
This should be good news for property developers, who have seen their share prices surging 15 to 20 percent in the past month.
Over the weekend, developer Paliburg nearly cleared its 100 new units in Cheung Sha Wan at an average price of HK$14,000 per square foot. These are mainly studio units with the size of a subdivided flat.
The latest Centa-City Leading Index was at 129.84, or about 11 percent below its all-time peak in September last year.
Centanet chairman Shih Wing-ching expects the index to return to its peak later this year.
The global market sentiment also helps as investors are looking for high-yield plays; they believe that the quantitative easing era will see a lot of asset inflation.
As a result, Hong Kong residential units are under the spotlight again, especially after home prices in neighboring Shenzhen surged 50 percent last year, matching, if not surpassing, those in Hong Kong.
It’s also a political bet. Those buying housing units or property stocks are making an indirect bet against Leung’s re-election as the next leader is likely to be more property-friendly.
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