HONG KONG (Reuters) – Hong Kong private home prices hit a record high in July, according to revised data, before dropping a tad in August, suggesting one of the world’s most expensive property markets is showing little sign of cooling.
The government has doubled down in recent weeks on a long-term pledge to make housing more affordable.
Prices in the global financial hub rose by a revised 0.8% in July, before dipping 0.15% in August, official data showed. The price index of 397.7 for July was a record high and compares with 397.1 in August.
The previous record high was 396.9 in May 2019 before mass anti-government protests and the COVID-19 outbreak.
Prices are up 4.5% since the end of last year, buoyed by a recovering economy and hopes that mainland Chinese buyers will return to the market when COVID travel restrictions are lifted.
In Hong Kong, 7.5 million people are packed into roughly 30% of the territory, with the rest comprising green belts, country parks, woodlands and wetlands where any plans for development have faced tough opposition from environmentalists.
Making housing more affordable has been a priority for all of Hong Kong’s leaders since the former British colony returned to Chinese rule in 1997, although the prospect of owning a home is still a distant dream for many.
During a visit to a property showroom in August, Eunice Ma, 50, said she was planning to buy a two-bedroom in a high-end new development close to the mainland China border for her 26-year old son.
“Whether the flat will make a profit or not, I don’t think about it that way, because I purely want it for my son’s marriage in the future,” she said.
The city also has a serious shortage of car parks, resulting in some spaces fetching huge sums of money. Local media reported earlier this year that a luxury residential development on The Peak sold a parking space for HK$10.2 million ($79 million).
As part of efforts to solve the chronic housing shortage, Hong Kong plans to build artificial islands at an estimated cost of at least HK$624 billion.
Betting on the high demand, real estate is still seen by many as the safest investment.
“Keeping the money in a bank doesn’t give you interest, but with an apartment you can at least rent it out,” said Vera Tang, a 50-year old housewife who was looking to use her retirement fund to buy an apartment for investment.
($1 = 0.1284 Hong Kong dollars)
(Reporting by Anne Marie Roantree and Sara Cheng; Editing by Ana Nicolaci da Costa)
