HONG KONG – Hong Kong private home prices climbed 2.2 per cent in February, the second straight monthly increase, helped by improving sentiment after the border with China was reopened, expectations that interest rates are peaking and a spate of new launches.

The jump in home prices in February followed a revised 1 per cent gain in January and was the biggest since May 2020, official data showed on Wednesday.

The financial hub this month was ranked by survey company Demographia as the least affordable city in the world in 2022 based on property prices versus median income, with Sydney and Vancouver trailing behind. This was the thirteenth consecutive year that Hong Kong topped the ranking.

“Hong Kong has been given a clear responsibility by the central government to improve housing affordability and increase house sizes,” Demographia said in its report last week.

Beijing identified unaffordable housing as a key cause of discontent in the former British colony, especially among younger residents, and a driving factor in the sometimes violent anti-government protests of 2019.

Some analysts have raised their 2023 forecasts for housing costs in the city over the past few weeks, expecting a reversal after prices fell around 15 per cent last year. The dip was the first annual drop since 2008, with the market dragged down by a weak economic outlook, rising mortgage costs and a Covid-19 outbreak at the beginning of the year.

JP Morgan analyst Cusson Leung said he expects a 10 per cent to 15 per cent rise this year, spurred by a slowing pace in interest rate hikes, a stronger economy and more purchases by non-locals.

“The significant pick-up in high-end residential transactions is a strong vote of buying confidence in the Hong Kong housing market,” he added in a report.

Recent projects also recorded strong purchase rates at launches, he noted.

Realtor Cushman & Wakefield expects home prices to rise 5-10 per cent for the full year, revising its previous forecast of a flat market to a 5 per cent drop. It said transaction volumes will rebound 25 per cent to 35 per cent.

It added that the reopening of borders and the government’s recent move to lower stamp duties for first-time buyers of small- to mid-sized apartments had prompted more transactions in the residential market. REUTERS