Top Biz News

Hong Kong home sales are on a roll

By Chia-Peck Wong (China Daily)
Updated: 2010-03-03 10:10

HONG KONG - Home sales in the special administrative region jumped to the highest level in five months as an economic rebound and the lowest borrowing costs in at least 20 years spur demand.

Sales rose 13 percent to HK$40.8 billion ($5.25 billion) in February from the previous month, the Land Registry said on Tuesday on its website. The number of transactions climbed 10 percent to 11,733, the agency said.

The jump in home-buying underscores concern that the property market may overheat after prices surged 29 percent last year. The Hong Kong Special Administration Region government raised taxes on luxury-home sales and pledged to boost the supply of apartments after reporting an increase in fourth-quarter economic growth last week.

"With the economic recovery and a low interest rate environment, it's hard to put a bearish feel on the property market," said Buggle Lau, chief property analyst at realty company Midland Holdings Ltd.

The gains will be sustained "unless we see rates increase significantly, or the government introduces more measures", he said.

Hong Kong banks are offering home loans at interest rates that are the lowest in at least 20 years. Hang Seng Bank Ltd, the city's second-biggest provider of such loans, said on Monday that Hong Kong mortgages will erode profitability if borrowing costs are further reduced.

"Mortgage rates are already at a very low level and banks need to be able to make a reasonable profit," Hang Seng Chief Executive Officer Margaret Leung said at a briefing on Monday.

Bloomberg News