Many in the property sector are wondering if home prices will surpass the dizzy heights of 1997. Prices on Hong Kong Island have been steadily rising as solid demand and abundant liquidity continue to prevail in the low-interest-rate, yet inflationary, environment.
According to the Centa-City Index (CCI), produced by Centaline Property Agency, which tracks prices using 1997 levels as a comparison, the index in the second quarter reached 110 compared with a base score of 100 in 1997.
Over the past two or three months, the CCI has risen for eight consecutive weeks before easing, partly reflecting concerns about uncertainties over chief executive-elect Leung Chun-ying's housing policies.
Wong Leung-sing, associate director of research at Centaline, says luxury home prices on Hong Kong Island are already well above the 1997 peak, and this is especially true for deluxe houses and new projects that are commanding exceptionally high prices.
'There are good signs that the overall property index will go upwards further and surpass 1997 levels, thanks to continuous buying interest in the market,' Wong says. 'In the latest market rally, the mass sector has actually outperformed and recorded a stronger price hike with the release of pent-up demand, especially for properties in major private housing estates.'
Trade has become brisk over the past two months, with developers acting decisively to take advantage of the buoyant sentiment with the launch of new projects.
At Chun Fai Terrace in Tai Hang, Mid-Levels, The Signature is reaping strong buying interest. The new project, jointly developed by New World Development and Peterson Group, provides 66 luxury homes. New World says the sales response has been great, with about 70 per cent of units sold at an average price of about HK$23,600 per square foot as of the end of April.
