Hong Kong used home prices rose the most in almost two years, as public reaction to a government subsidized housing project this month fueled buying sentiment, according to Centaline Property Agency Ltd.
The Centaline City Leading Index rose 2.11 percent in the week ended Jan. 20, Hong Kong’s biggest closely-held broker said in an e-mailed statement. That was the biggest seven-day gain since the period ended Feb. 13, 2011, according to its website.
Greenview Villa, a government-backed project in the city’s northwest Tsing Yi district, drew about 58,300 orders for its 988 units when application closed Jan. 18, Sing Tao Daily reported today, citing Transport and Housing Secretary Anthony Cheung. The project is part of Chief Executive Leung Chun-ying’s plan to increase housing supply, after home prices in the city doubled in four years.
“When people see reaction like this, of course everyone would want to jump into the market,” said Wong Leung-sing, an associate director of research at Centaline. “The plan itself wasn’t a bad idea but the timing was. If you are trying to cool sentiment you shouldn’t put this out on the market. It’ll only create the perception that the market is still hot.”
The index, which measures weekly second-hand home price movement, normally reflects deals signed three weeks earlier, said Wong.
Leung has imposed measures such as extra taxes on foreign homebuyers and tightening mortgage lending since taking over in July. The former surveyor pledged during his election campaign last year he would bring down prices that are now the world’s highest and bridge wealth gap.
Leung’s government will provide land to build 75,000 public homes in the next five years, and the private sector may sell 67,000 in the next three to four years, he said during the Jan. 16 policy address. The total of 142,000 compares with the 124,000 built in the previous five years, based on figures Leung provided in his speech.