We have seen visible signs of recovery in Hong Kong’s economy this year. Real GDP resumed with appreciable YoY growth of 7.9%, ending six consecutive quarters of contraction. Unemployment rates have also fallen for the second month in a row, to 6.4% for the February to April period. Amid this uplift, our expert Alfred Wong of Capital Markets & Investment Services sees clear reason to be optimistic. Read on as he shares his on-the-ground observations.
Home prices reached a 21-month high in April
Amid the government’s anti-epidemic measures, the fall in unemployment, and the increase in GDP growth, the property market has reason to be optimistic, especially in terms of home prices. The latest home price index edged up 0.4% to 390.8 in April from 389.1 in March, which was the highest since July 2019 and was within circa 1.5% of the historic high recorded in May 2019. The data indicates that demand is returning to the market for expensive properties, with the sale of homes worth more than HK$10 million recorded significant growth last month. For owners looking to sell this provides a good opportunity to leverage the market.
In addition, six new developments were launched for sale in May, with most of them already being sold. With more potential investors speeding up their decision-making process, fearing a further increase in home prices, the number of new homes sold rocketed by nearly 50% month-on-month in May to 1,558. For example, the first new development at The Southside of Wong Chuk Hang has an average net unit price of HK$29,689 per sq. ft. for the first batch. Despite this, the project still received over 5,500 subscriptions, which is 22 times the available units. It is expected that the buoyant housing demand, a shortage of land and housing supply, as well as a consistently low interest rate environment will support residential prices for at least the medium-term future.
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