Hong Kong Apartment Buying Fever Starts Cooling Down

Posted on 27 August, 2021 | By Property852

The past few months have seen rising property prices which are currently at the brink of a return to historic highs. Combined with increasing transaction volume, market valuations of Hong Kong apartments have been pushed higher.

Hong Kong Apartments

Although valuations have slowed for several blue-chip housing estates in the past month, a number of tier-two housing estates have seen valuations of Hong Kong apartments for rent outperforming the market.

Modest Upward Trend

Overall, increases have tightened in comparison to the second quarter, with gains of 0.2 to 4 percent in the latest valuations for 15 of the 20 index estates.

At three out of four of the remaining estates, valuations remained flat, with just one recorded decline, showing banks taking a more aggressive stance.

The Rating and Valuation Department reports a rise in the private domestic price index for the fifth consecutive month. It further reported that the latest index reached a two-year high, just slightly below a historic record.

According to Louis Chan Wing-kit, Centaline Property Agency’s Asia-Pacific Vice-Chairman of the residential division, small and medium Hong Kong apartment units with prices less than HK$10 million were strong, and contributed to the valuations increase.

He also remarked that Tseung Kwan O, over the last three years, has rapidly developed and has become a favorite choice for many wanting to get started on the property ladder.

Additionally, he noted that despite increased valuation for units at Nan Fung Center in the same area, they remain popular. Many buyers seeking Hong Kong apartments with values under HK$10 million are eyeing these units. He also noted that new Kowloon property launches will aid in boosting valuations.

Vincent Cheung Kiu-cho, Managing Director at Vincorn Consulting, stated that a major factor affecting prices and valuations is the proximity of infrastructure to a property. Both the New Territories and Kowloon have benefitted from rail network improvements recently. As a result, they have experienced more pronounced valuation increases. However, he said that the increases were not as notable on Hong Kong Island because prices were higher there previously.

Nan Fung Plaza, located in Tseung Kwan O, recorded the highest valuations increase last month.

Last month, a 697 square-foot unit had a valuation increase of four percent, rising to HK$9.6 million from HK$9.23 million in June. This increase occurred after a prior 4.5 percent rise which was the third highest of the twenty index estates in June. The compound surge constituted an 8.7 percent increase in only two months.

Hong Kong Apartments

Telford Gardens saw the second highest increase in Hong Kong apartments at 3.4 percent.

Chestwood Court, Kingswood Villas, June’s highest performer, saw a slowing in its upward trend during the second quarter. The value of a 458 square-foot Hong Kong apartments had a rise in valuation of 1.2 percent last month to HK$5.07 million, a decrease from the previous 6.8 percent record.

The only estate which recorded a downward trend was Kornhill. A 596 square-foot unit which had an estimated HK$11.01 valuation as of June decreased by 0.5 percent last month to Hk$10.96 million.

With the rise in prices in recent months, the overall transaction volume decreased.

Estates that had recorded substantial valuation increases during the second quarter are expected to see slighter increases in the third quarter.

It is expected that banks will accordingly adjust their valuations, taking into consideration the latest valuation data.

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