Month's total of HK$40.8 billion fueled by economic recovery and low mortgage rates

With the economy recovering and interest rates at the lowest levels for decades, both government figures and information from property agencies showed the real estate market is very active indeed.

The latest government data showed residential property sales last month rose to the highest level in five months.

Figures from the Land Registry showed that total sales in residential units (existing and new) for February amounted to HK$40.8 billion, up 12.8 percent from January and up 199.4 from February 2009.

The number of transactions was 11,733 residential units, up 10.1 percent from January and up 161.5 percent from the same period last year.

The news came as Centaline Property Agency said yesterday that from its own figures, the value of existing home sales reached HK$1.52 billion in February, a record since November 1997.

The agency's data also showed sales jumped 150 percent to 960 in February, from 370 in January 2009.

"There are still a lot of options for second-hand homes worth less than HK$1 million in the New Territories, which would be the top choice for young, first-time buyers," Louis Chan, Centaline's general manager of residential properties.

"With the economic recovery and a low interest rate environment, it's hard to put a bearish feel on the property market," said Buggle Lau, chief property analyst at real estate agent Midland Holdings.

Real estate prices surged an average of about 30 percent last year, with luxury homes rising even more.

To prevent a bubble in the property market, Financial Secretary John Tsang announced in his Budget Speech on February 14 that the government will raise taxes on luxury-home purchases sold for more than HK$20 million, with the stamp duty rising to 4.25 percent from 3.75 percent. He added the government may introduce further measures to stablize the property market if necessary.

The government has also told the MTR Corporation and the Urban Renewal Authority, both of which property developers majority-owned by the government, to speed up the building and selling of mass-market flats to help stablize the market.

Hong Kong residents are buying lower-priced homes after the government measures, said Cusson Leung, an analyst at Credit Suisse.

"If the mass-market property prices were to rise too much, such as beyond 15 percent, the government will act," Leung said, adding that the sales were mainly driven by buying of existing homes in January, given the lack of new projects being launched.

Transactions for homes valued at between HK$5 million and HK$10 million rose 10 percent to 1,163 in February, according to Land Registry figures.

For those worth at least HK$10 million each, the number of transactions rose 30 percent to 546.

"The secondary market is dominated by the lower-priced homes, where a lot of the buyers are locals," Lau said.

Transactions of existing homes rose 15 percent in February from January, while by value, they gained 19 percent, he said, citing Midland's figures.

Agencies - China Daily

(HK Edition 03/03/2010 page3)