The figures from the Land Registry showed that residential property sales alone were up 42%, the biggest increase since February 2008.
Residential property prices in the city are rising amid hopes that the worst may be over for the world's biggest economies. The property market may also benefit as banks drop lending rates to lower home-buying costs and stimulate demand.
'Low interest rates have given the property market a psychological boost. Gains in the stock market are also bringing a lot of confidence to investors,' said Wone Leung-sing, associate director of Centaline Property Agency Ltd.
One who is confident is billionaire Li Ka-shing, the city's richest man, who said that real estate-investors are 'sure to make money' over the next three to four years. He is also chairman of Cheung Kong Holdings, the city's second-biggest builder by market value.
On the back of the figures Goldman Sachs upgraded the Hong Kong property sector to attractive from neutral due to an improving outlook for prices and stabilisation of the commercial real estate market.
Meanwhile, analysts at investment bank Macquarie Research are forecasting housing prices to increase 15 to 20% in 2009 due to limited supply and strong demand. With low supply, strong household balance sheets, few alternatives for capital, greater affordability and more buyers from the mainland entering the market, asset prices are on the rise despite the weak economic environment.
'This means that for the first time in 20 years, we estimate prices will increase in the face of increasing unemployment,' Macquarie said in a report.
Confidence is also spreading to mainland China but Shimao Property warned of a looming real estate bubble as some development sites on the mainland were sold at very high prices and fierce bidding among land-hungry developers could lift home prices to expensive levels.
