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Coronavirus Hong Kong
Business

Hong Kong’s June home prices rise to 10-month high as buyers defy coronavirus in search for safe haven assets

  • June’s index of used homes edged up by 0.1 per cent to 386.1, according to figures by the Rating and Valuation Department
  • Buoyant home prices have helped to halt the slide of mortgage borrowers into negative equity

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Up to 1,400 people registered to bid for 160 apartments at Wheelock Properties’ Koko Hills project at Harbour City in Tsim Sha Tsui on 11 July 2020. Photo: May Tse
Lam Ka-singandEnoch Yiu
Hong Kong’s home price index rose to the highest level in 10 months in June, as investors and speculators defied a third wave of coronavirus infections in the city in their search for safe haven assets amid a gloomy outlook for the global economy.
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June’s index of used homes edged up by 0.1 per cent to 386.1, according to figures by the Rating and Valuation Department, chalking the highest level since 388.2 in August 2019. The index dipped by 1.9 per cent compared with June last year.

The coronavirus pandemic, which has sickened more than 3,000 people in Hong Kong and claimed 27 lives, also disrupted the city’s construction activity, cutting the number of new private residential units by 3,000 units to 92,000 for the next three to four years, according to data by the Transport an Housing Bureau. The drop in supply is helping to put a floor on home prices, analysts said.

“It is hit by the pandemic [as] the progress of construction was delayed,” said Wong Leung-sing, senior associate director of research at Centaline Property Agency, adding that the supply of new homes may fall below 90,000 units. “The epidemic has dragged down the sales of new homes, and the supply of new homes in the future will begin to decrease, which is a self-correction in the market.”

The prices of lived-in and newly launched homes are hanging on stubbornly in the world’s most expensive urban centre, even as its economy is mired in its worst recession on record. A flood of cheap liquidity unleashed by central banks has driven investors to search for better returns in fixed assets and precious metals, prodding them to snap up new apartments during weekend launches.
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