Luxury home prices in Hong Kong have surpassed their peak during the pre-Asian crisis, frustrating government efforts to dampen the city’s expensive property market.
Average prices for homes measuring at least 100 sq m are now 14 percent higher than before the 1997 downturn, said the Hong Kong Monetary Authority (HKMA).
The data, which comes amid concerns of a property bubble, has prompted some lawmakers to call for the resumption of a subsidised housing scheme due to rising concerns on the growing income gap in the city.
According to government figures, average luxury home prices were HK$142,249 psm in August, compared with about HK$122,500 prior to the 1997 crisis.
Government data showed that home prices generally fell around 60 percent during the Asian crisis. The cost of a home, however, has surged over 45 percent from its trough in 2008, prompting authorities to hold nearly half a dozen sales in the previous year to increase supply.
Earlier in October, Hong Kong chief executive Donald Tsang outlined a new set of property cooling measures, which include stopping automatic residency for wealthy real estate buyers.
This move will likely affect rich mainland Chinese investors, who make up as much as half of Hong Kong luxury home sales, fuelling claims that speculators are contributors to the sharp price increase.
“We are not surprised by these (property price) figures,” said Buggle Lau, chief analyst at Hong Kong property broker Midland Holdings. “In recent years, Hong Kong has seen a surge in mainland Chinese buying luxury homes. This has created a situation where demand for luxury homes exceeds supply.”
While non-luxury flat prices remain below their peak in 1997, they have made home ownership impractical for many Hong Kong residents.
“Residential flat prices have become a major concern for Hong Kong people,” said pro-government lawmaker Raymond Ho, who asked the government to do more to help less well-off residents.
“The middle and lower class are finding it more difficult to afford flats amid ever-increasing property prices. The government should consider resuming ‘Home Ownership Scheme’ to meet the demand for flats and increase land auctions to increase land supply,” added Mr. Ho.