Hong Kong's home prices are still hovering at record levels despite fresh local economic worries and uncertainty about the euro-zone debt crisis arising from election results in France and Greece that have sent the world's financial markets reeling.
Investors seem to have their mind tuned to the seasonal rhythm related to the stock market - 'sell in May and go away' - as the Hang Seng Index is facing some turbulent times. Heightened concerns about Europe's ability to solve its debt crisis, in view of the election of anti-austerity Fran?ois Hollande as France's new president and the political turmoil in Greece, was partly to blame for the stock losses worldwide.
Apparently undaunted by negative stock market sentiment, residential prices continue to climb, although at a slower pace than before. Property agents reported the trading of selected high-quality homes in traditional luxury locations and popular housing developments at new high prices, although the volume of transactions was easing.
For example, a 3,347 sqft luxury apartment at sought-after Estoril Court in central Mid-Levels changed hands for HK$93.8 million, or about HK$28,000 per square foot, early this month. A 905 sqft flat at Taikoo Shing sold for HK$10.8 million, or HK$11,934 per square foot.
Even government officials note that the residential market rallied after the Lunar New Year, with average prices gaining 5 per cent in the first quarter. By March, overall flat prices surpassed the previous historical peak in 1997 by about 10 per cent. Agents say prices have gone up further in April and May.
News of worse-than-expected gross domestic product growth for the first quarter dented market sentiment slightly. Hong Kong's economy slowed in the first quarter, with real GDP posting slight year-on-year growth of 0.4 per cent, mainly dragged by the lull in exports amid a difficult external environment. Domestic consumption remained strong and helped cushion the economic performance.
Global luxury property prices in the first three months saw the first quarterly fall since the beginning of the global financial crisis, but prices for Hong Kong's high-end homes managed to edge up 1.1 per cent, according to a report by Knight Frank.
