HK property market back to boom

Extending the rising momentum in 2004, Hong Kong's residential market activities have remained brisk during the first two months of 2005, sending transaction volume to the second high since the 1997 financial crisis.

According to DTZ Debenham Tie Leung Ltd., an international property advisor, the residential market registered 20,176 Sales and Purchase Agreements (S&P) over the two-month period.

If compared with those prior to the financial crisis, the transaction volume in the first two months of 2005 is in fact the fourth highest since 1992, fewer than the figures seen in the peaks of 1994 and 1997, and just below the third-highest figure seen a year ago. Subject to seasonal influences, the high level ofmarket activities registered is a rare yet encouraging phenomenon.

With the local economy resuming its upward climb which is expected to continue this year, coupled with improved employment conditions with the latest unemployment rate declining to 6.1 percent, a positive sentiment is felt in the residential market, bolstering growth not only in market activities, but also price, said Alva To, DTZ's director of Consulting and Research Department.

Property prices registered an average growth of 30 percent for the whole 2004. Extending the gains from last year, prices continue to edge higher in the first two months of 2005, with price at Taikoo Shing, Hong Kong's typical high quality residential apartment, increasing by 10 percent to the level similar to that of 1996.

Against a backdrop of low mortgage interest rates amid a prospering residential market, the decision to increase the loan-to-value ratio to a high of 95 percent has stimulated the demand of both first-time buyers as well as owners looking for better homes, accelerating their purchase decision.

Therefore, during the first two-month period secondary market transactions account for over 90 percent of total activities, reflecting an upbeat sentiment in the secondary market, said To.

Local analysts believe that having gone through a consolidationperiod in mid-2004, the residential market has returned to a boom cycle. Improving macro economic factors, combined with a positive outlook for the local economy and dwindling unemployment, underpinthe development of a healthy residential market.

Source: Xinhua