In July, demand for new-build residential properties was the key driver of Hong Kong’s residential market. With several new developments launching last month, 7,792 homes were sold in July, an increase of 95.5% year-on-year.
The strong demand for new-build homes was not replicated in the resales market, where limited supply of small homes and sellers standing firm on prices meant that activity was limited.
In the luxury residential market, several major transactions were seen in July, including the sale of the third flat at Opus in Mid-Levels East for HK$430 million (£33m). Luxury residential prices increased by 0.4% month-on-month, but in general the market remained slow, due to the government’s various cooling measures and an uncertain global economy.
Rental demand for luxury homes slightly improved towards the end of the second quarter, meanwhile, with expatriate families seeking homes prior to the start of the new school year. However, due to tighter relocation budgets and a shift to personal leases, there was no notable rental growth.
The mainstream residential leasing market entered its traditional peak season as overseas students flooded in searching for accommodation. Strong demand, mainly from mainland students, drove rents up by between 5% and 10% for properties near campuses in Sha Tin, Fanling, Hung Hom and Sai Ying Pun.
Despite the rising supply of new-build properties available for sale, residential property prices have held up recently due to sustained demand from buyers. We expect house prices will remain stable or fall by slightly less than 5% in 2014.
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