Home sales in Hong Kong rose strongly in February despite it being slow time of year

Residential property sales in Hong Kong soared 34% year on year in February despite it being a traditionally low season for the real estate market, the latest analysis report shows.

Sales were also up 4% month on month and in the prime property sector homes worth HK$10 million or above were up 26% month on month and 55% year on year.

The monthly Hong Kong property report from international real estate firm Knight Frank points out that official figures show that prices continued to trend upward, rising 1.3% month on month in January, but slower than December.

Luxury home prices, in particular, have risen for 20 months in a row, gaining 15% in total, according to Knight Frank figures. February also saw a limited number of new units being launched.

Secondary sales, in contrast, saw some improvement so far this year, up 68% year on year and the report says this was driven by improved market sentiment. This is reflected in the ratio of primary to secondary sales which has been around 2:8 so far in 2018, compared to around 3:7 in the three year period from 2015 to 2017.

Knight Frank says that the market does not expect a huge impact on mortgages from the US interest rate hikes this year. ‘As a result, we expect residential prices to go up mildly in 2018,’ it adds.

The report also reveals that Hong Kong Island Central’s Grade-A office rents grew slowly in February, increasing jut 0.8% month on month to around HK$155 per square foot per month. Central has been a landlord’s market thanks to low vacancy, the report explains.

Demand is coming from financial MNCs, mainland firms and new business entities such as co-working space providers and the report predicts that supported by positive business sentiment, Grade-A office vacancy on Hong Kong Island is expected to remain at a low level, while rents are set to grow further this year.

In Kowloon the Grade-A office leasing market was quiet in February due to the Chinese New Year holidays. ‘But as activities recover we expect the market will improve this year with Grade-A rents of Kowloon East rising about 2%,’ the report says.