HONG KONG: The city's "secondary residential property" prices - meaning resold home prices - have risen to their highest in almost a year, Centaline Property Agency Ltd, one of the city's biggest, said on Friday.

The Centa-City Leading Index, a weekly measure developed by Centaline and the City University of Hong Kong, recovered to 69.5 as of August 9, when compared with the 100 point-level for the base year, 1997. That's the highest since August 31, last year, the realtor said in an e-mailed statement Friday.

Home prices in Hong Kong, where luxury residences are Asia's second-most expensive, are climbing amid record low mortgage costs and near-zero interest rates on bank deposits. Stock market gains have also enriched buyers, boosting demand, said Louis Chan, managing director of residential sales at Centaline.

"Many investors are taking profits from the robust stock market to shift to property," Chan, Centaline's managing director of residential sales, said in a separate report e-mailed Friday. "With the low interest rates, liquidity is rushing in, stimulating home sales."

Centaline's mass housing index, which measures price gains on apartments in residential estates that cost less than HK$10 million each ($1.3 million), rose to 67.3 in the week ended August 9, the highest in more than a year, the report said.

Cheung Kong (Holdings) Ltd, the builder owned by Asia's second-richest man, Li Ka-shing, said yesterday Hong Kong's home market is "healthy." Shares in Cheung Kong Holding Limited and Hutchison Whampoa Limited, another property company owned by Li, have surged 31.6 percent and 47.5 percent this year, respectively.

About 70 percent of the buyers for Le Prestige, Cheung Kong's residential project in the Tseung Kwan O district, intend to live in the homes themselves, said deputy chairman, Victor Li, Li Ka-shing's eldest son, suggesting that Hong Kong's market isn't in a speculation-driven bubble.

Optimism that Hong Kong's home prices will rise has lifted the Hang Seng Property Index 57 percent this year.

Blue-chip property shares have put in strong performances this year: shares in New World Development, owned by tycoon Cheng Yu-tung, rose 117.6 percent from the end of 2008 while Sun Hung Kai Properties, which leaded by Kwok Brothers, jumped 72 percent. Sino Land Group and Hang Lung Properties rose 84.3 percent and 50.5 percent since last year.

Bloomberg News

(HK Edition 08/15/2009 page2)